Small-Scale Manufacturing in Toronto

BAILEY BRADSHAW MADELINE GIBSON ANNA GUIDOCCIO JING HE RORY JAMES CAMERON LEWIS JORDAN MCLEOD JOSEPH MCMACKIN DENISE MCMULLIN KALVIS MIKELSTEINS DARRIN RANKINE ALLISON TAM

APRIL 15 2016

EXECUTIVE SUMMARY The Toronto Made 2016 Client-based Studio group is pleased to present “Protecting and Encouraging Small-Scale Manufacturing in Toronto”: the final report for our client Toronto Made. This report will address the project’s mandate of analyzing the challenges faced by small-scale in the city, and identifying opportunities for intervention. Small-scale manufacturing fulfills an important role in Toronto’s diverse economy, and requires specific support to ensure that this sector is protected and allowed to thrive.

This report will set the scene for manufacturing in Toronto today, through a review of historical and policy contexts. It will make a case for manufacturing by presenting its economic, social, environmental and fiscal benefits. As part of this project, a survey of small manufacturers was conducted resulting in thirty nine online, telephone, and in-person interviews. This report will detail the survey methodology and findings, and will use these findings to contribute to a further discussion of the challenges and opportunities for small manufacturers in Toronto. Finally, based on this analysis, three main recommendations will be presented:

1. Creating and Supporting Mixed-Use Policies for Manufacturing 2. Creating Shared Spaces for Small-scale Manufacturers to Thrive 3. Developing a Strong Network of Support for Small-scale manufacturers

The rationale, specifics, and implementation of each recommendation will be described in detail. These recommendations include both aspects which can be adopted directly by Toronto Made, and which Toronto Made can advocate for as larger policy changes or initiatives between Toronto Made, the city, and other non-profit or for-profit organizations.

The group would like to thank Derek Brunelle and the Toronto Made team for their support and feedback throughout this project. Further, we would like to thank the thirty nine manufacturers who contributed to the survey. Thank you to Nirvana Champion from City of Toronto Economic Development, Gil Meslin from Artscape, Christina Cattana from CBR, and the Toronto Chinese Business Association, for their assistance with this project. Finally, thank you to Professor Webber for his outstanding support, invaluable insights, sense of humor, and investment in our success in this project.

Brothers Dressler Studio A. Guidoccio

TABLE OF CONTENTS

1. INTRODUCTION

1.1 Defining Small-scale Manufacturing 2. BUILDING A CASE FOR MANUFACTURING IN TORONTO

2.1 Economic Benefits

2.2 Social Benefits

2.3 Environmental Benefits

2.4 Fiscal Benefits 3. RESEARCH

3.1 Secondary Research

3.2 Site Profiles

3.3 Summary of Findings - Survey Research 4. DICUSSIONS

4.1 Provincial Planning Framework

4.2 City of Toronto

4.3 Current State of Employment Lands

4.4 Land-Use Conflicts in Mixed-Use Neighbourhoods

4.5 Skilled Labour

5. RECOMMENDATIONS

5.1 Recommendation 1

5.1.1 Commercian Residential Employment - Manufacturing Mixed-Use Zoning

5.1.2 Encouraging and Promoting Manufacturing Through Creative Economic Districts

5.1.3 Building Community Support Through Consultation and Education

5.2 Recommendation 2

5.2.1 Creating a Shared Manufacturing Space That Works For Small-Scale Manufacturers

5.3 Recommendation 3

5.3.1 Building A “Made in Toronto” Brand

5.3.2 Enhaning Services To Assist Small-Scale Manufacturers

5.3.3 Establishing Toronto Made as The Primary Spokesperson For Small-Scale

Manufacturing In Toronto 6. NEXT STEPS 7. APPENDIX 8. REFERENCES

1 INTRODUCTION THE ISSUE As Toronto continues to grow, balancing the development of competing land uses will become increasingly challenging. Manufacturing plays a vital role in Toronto’s diverse economy and is an important component of Toronto’s mix of land uses.

Small-scale manufacturers make up a significant portion of the manufacturing industry, and have an unique and essential role in maintaining Toronto’s manufacturing. However, small-scale manufacturers are currently experiencing rising pressures which impact their ability to secure and maintain space, as well as grow their businesses in the city. Existing City of Toronto policy intended to protect these manufacturers leaves several gaps that make it difficult to achieve these goals. These gaps will be further explored throughout the report.

THE CLIENT Toronto Made is a non-profit organization formed in 2014 that supports and advocates for small-scale manufacturers in Toronto. The organization is focused on establishing an online network of small manufacturers, providing access to resources, and participating in and organizing local events. Toronto Made works to achieve three main goals:

1. Job-based advocacy: promoting the value of manufacturing in order to create new job opportunities; 2. Building network capacity: encouraging network building and local material sourcing; and 3. Local branding: providing a common platform and recognizable brand for Toronto Manufacturers.

THE PROJECT As a part of Ryerson University’s Urban and Regional Planning Client-based Studio, this group has been delegated to analyze the challenges faced by manufacturers in the City, and identify opportunities for intervention. This has involved background research on the historical, policy, and real estate contexts of Toronto manufacturing, benefits of manufacturing, and challenges facing Toronto manufacturers. Interviews were conducted with thirty-nine small-scale manufacturers in the city to gain in-depth insights into the most prominent challenges for this sector. Initial research and interview findings were summarized in an interim report and presented to Toronto Made in March 2016. The final product for the project is a report highlighting the background research, describing survey findings, and providing in-depth recommendations which Toronto Made may carry forward.

The project has been guided by the following vision statement: The Toronto Made studio group will assess and advise on significant factors concerning small-scale urban manufacturers in Toronto. It will identify current land use planning policy, real estate context, economic development opportunities and best practices. It will ultimately identify key areas of improvement, tools and strategies to support and grow small-scale urban manufacturing in Toronto.

THE REPORT This report will present the research conducted on historical and policy contexts, benefits of manufacturing, and challenges facing Toronto manufacturers. It will describe the survey methodology, and analyse key themes and findings from the surveys, as well as profiling a sample of the survey participants. Finally, based on our findings, three recommendations will be made to address major challenges and offer increased support for small-scale Toronto manufacturers.

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2 Alissa Coe’s Studio A. Guidoccio

What defines smallmanufacturers?

1- 50 EMPLOYEES 400 - 15,000 square feet

Global exports Locally-based target markets

Home spaces, shares spaces, rented or owned workships

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Custom, made to order, small batch products

1.1. DEFINING SMALL-SCALE MANUFACTURING While federal and provincial policies define small businesses as having less than 100 employees (Statistics Canada, 2015), small manufacturing firms of 1-4 people are the only size which has grown in Toronto in the last decade (City of Toronto, 2013). It is important to recognize this element when considering policy to help grow small-scale manufacturing in Toronto. Numerous definitions of smallscale manufacturing have difficulty addressing the multifaceted, complex identity of these producers, as businesses rarely conform to rigid definitions concerning employee counts, operating space and/or target markets. For the purpose of this report, small-scale manufacturing will be defined based as the following: manufacturers with activities involving the production/creation/processing of physical products on site. Small manufacturers exist primarily within, but not exclusively within the following vectors:

· 1 - 50 employees · Spaces of 400 sqft - 15 000 sqft · Locally-based target markets as well as global exports · Custom, made to order, small batch products · Home spaces, shared spaces, rented or owned workshops

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2 BUILDING A CASE FOR MANUFACTURING IN TORONTO The deindustrialization narrative in North America has cast doubt on whether manufacturing should continue to be an integral component of our economy in the 21st century. Over the last four decades, Canada’s manufacturing industry has lost over 460,000 jobs, which reduced the industry’s total share of national employment from 16% to 10% by 2009 (StatsCan, 2015).

Within the context of Toronto, manufacturing currently accounts for 9% of employment, the second lowest share of any industry in the city (City of Toronto, 2015). Due to this sharp decline, it is easy to see why policymakers might focus on policy and strategies that will help shift our cities from a production economy to a knowledge and service based economy (Leigh & Hoelzel, 2012).

However, for the first time since the 2008-2009 financial crisis, Toronto manufacturing experienced an annual growth of 0.4% in 2015, indicating that new firms view the city has an attractive place to locate (ibid.). Toronto’s urban setting offers many benefits to the modern manufacturer that includes access to: a highly educated and skilled workforce, extensive transportation infrastructure, and a diverse client and network base. One local manufacturer summarized the importance of locating in Toronto by stating: “It’s nice to be downtown. Sometimes we question why we’re in Toronto, why we’re making it so difficult due to costs. It just feels like we should be in this major hub working. It also helps with people’s perceptions - if you’re working in Toronto you must be doing something right” In turn, the resulting benefits manufacturers receive by locating within Toronto should be viewed as a reciprocal, rather than one-sided relationship. Although manufacturing has lost a significant share of our economy, this industry still has the capacity to provide many benefits to the communities in which it locates. Manufacturing fits with the goals of sustainable city building as recognized in the Toronto Official Plan’s strategic direction. These features of sustainability consider the economic, social and environmental implications city-building choices have for the long-term horizon. The following section will situate manufacturing within a sustainability framework to demonstrate its important role within a healthy city.

2.1 ECONOMIC BENEFITS The economic benefits of manufacturing within a city extends beyond the direct measurement of Gross Domestic Product (GDP) output or job creation. There are numerous indirect impacts that situate manufacturing as an important industry within modern and urban cities like Toronto.

DIVERSITY: Maintaining diversity is a key component to sustaining a healthy economy. By supporting a diverse economy, cities and regions are better able to withstand external threats and trends such as global recessions or shifts like offshoring. Therefore, by supporting a variety of industries, a downturn in one industry can be mitigated by the growth of another (Malone Given Parsons, 2012). For example, if a large firm leaves a region, the social and economic consequences on a community can be long lasting and

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devastating. However, if the share is spread across a number of smaller firms of various industries, the impacts from external economic threats are mitigated. Small, modern, urban manufacturing tends to be horizontally integrated and decentralized. This means that firms do not rely upon a single source throughout the supply chain or organizational structure to operate the firm, thus making these firms adaptable to changing environments (Mistry & Byrons, 2011). Having a large number of small manufacturing firms, producing a wide variety of goods for different markets should be encouraged for long-term sustainability of urban economies.

PRODUCTIVE JOBS: Not all industries and jobs have the same impact on the local economy. Compared to other industries, manufacturing is strong in terms of productivity. This type of productivity is measured by the multiplier effect which calculates the number of jobs supported by one job. On average, for every one manufacturing job created in Toronto, 1.2 additional jobs in manufacturing and other high-value sectors, such as logistics and primary industries, are created (Mistry & Bryon, 2011). These additional activities arise from the many connections along the supply chain that go into the production and transportation of goods. Therefore, the interdependent relationships between Toronto’s manufacturing firms and other industries highlight how manufacturing is an important staple for the local economy. If these jobs leave Toronto, so do a significant amount of jobs in other sectors and industries like finance, logistics, insurance and business services.

In contrast, service-based jobs which currently make up about 30% of Toronto’s workforce (City of Toronto, 2015), have a comparatively lower multiplier effect of 0.2 additional jobs created (Malone Given Parsons, 2012). Figure 1 highlights the multiplier effect of manufacturing compared to other industries in Ontario.

Other ways to measure the productivity of a particular job is through direct, indirect and induced impacts on the local economy.

Direct impacts are related to the original purchases from the supplier to operate a business such as machinery, inventory and employee salaries. Direct impacts are related to the original purchases from the supplier to operate a business such as machinery, inventory and employee salaries.

· Indirect impacts include the re-circulation of money spent from one business to other local business areas. · Induced impacts arise from the additional consumer spending that an employee will spend within the local economy. · Indiviuals with well-paying, stable, middle-income jobs provided by the manufacturing industry often invest their money in local communities.

The Economic Impact Study of Food and Beveage Ontario has used an input/output model from 2012 Statistics Canada Data that highlights the greater economic impacts that this sector has on the economy.

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FIGURE 1:

MULTIPLYING

JOBS

FOR EVERY MANUFACTURING JOB...

Information Technology 1.2 NEW JOBS ARE CREATED

Business, Transportation or Trades 0.8 Jobs

Manufacturing generates jobs outside of the factory when compared with other sectors

Retail 0.6 Jobs

0.2 Jobs 7

2.2 SOCIAL BENEFITS In addition to its economic benefits, manufacturing jobs can play a catalytic role in the successful social development of communities and neighbourhoods. Creating more local manufacturing jobs has the capacity to leverage people into a higher quality of life through higher average salaries, meaningful benefits, and lowered rates of unemployment. These opportunities exist for newcomers and individuals with lower education levels and socio-economic backgrounds.This is made possible by the manufacturing industry’s history of strong social labour equality and its ability to create micro-economies within its locale.

Traditionally, manufacturing jobs have been represented by labour unions. In Canada, these unions have played an important role in the development of fair, accessible employment; fighting for equal wages, stronger health and safety regulations, and meaningful social programs such as healthcare and pensions (Jackson, 2013). As a result, unionized jobs are more likely to have higher wages than the national average and provide a larger percentage of full-time employment opportunities compared to other industries (Statistics Canada, 2015).

The presence of unions has often been an indicator of social equality in a community. Unions have helped to break down job market discrimination by providing minority workforces with easier access to meaningful employment (Jackson, 2013). Although, there has been a decline in unionized jobs and small manufacturers are not typically associated with any particular union, non-unionized manufacturers continue to carry on the tradition of social equality (Statistics Canada, 2015).

In a 2008 report, the Canadian Labour Congress (CLC) highlighted the very important social multiplier effects that manufacturing jobs have on a community. When manufacturing jobs come to a community, their strong tradition in social and labour equity often encourage other employers in the area to maintain similar levels of social and labour equality to remain attractive places of employment (Beaudry, Green, & Sand, 2012). In addition, because of manufacturing’s strong economic multiplier effect, more people in the community will have full-time, stable wages and social benefits.

“Manufacturing jobs are essential to the Canadian economy. They provide decent wages (over $20 per hour on average) and benefits; increase the tax base for communities, which helps to improve schools and community services; and create spin-off jobs. This means more workers spending their money locally—buying their cars in their hometowns; owning homes where they live; shopping at the local grocery stores; paying taxes for schools, hospitals, libraries, roads, water and sewers.” (Broad, 2012) However, when this network collapses, it leaves individuals and communities in devastation. In 2008, when manufacturing was at the height of its decline, the individuals who had lost their jobs averaged a $10,000 pay cut, not to mention the loss of social benefits like pensions and health insurance, when starting a new manufacturing job (Alini, 2011). Statistics Canada points out, “In 2008, unemploy-

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ment periods in manufacturing were 15% longer, on average, than in non-manufacturing; this is the largest difference in duration of unemployment for ex-workers in manufacturing versus nonmanufacturing that has ever been” (Statistics Canada, 2015).

2.3 ENVIRONMENTAL BENEFITS There are several environmental benefits small-scale manufacturing and the purchase of locally made goods. When manufacturing is located locally:

· Environmental standards are more heavily regulated, · There is less fuel consumption from the transportation of goods and raw materials · There is more accountability from manufacturers with regards to minimizing ecological footprints, and · there is potential to recuperate production costs through environmental practices (Steger, Murray, & Greer, 2016).

Small-scale local manufacturers typically engage in “lighter” forms of manufacturing and represent a cleaner model for modern manufacturing (Byron & Joan, 2011). Compared to its manufacturing predecessors, light manufacturing has a smaller ecological footprint (Thibault, 2006). When manufacturing relocates internationally, there is a rise in ecological costs and often a decline in environmental standards (Mistry & Byrons, 2011). The key to maintaining a smaller ecological footprint for small-scale manufacturers, is remaining local.

2.4 FISCAL BENEFITS From a fiscal perspective, manufacturers provide a significant benefit to cities through revenue generated by industrial property tax. In 2012, the City of Toronto generated nearly $120 million from industrial property tax which accounted for only 2% of Toronto’s land inventory (Slack & Côté, 2014). Currently, Toronto’s industrial property tax rate is the highest of all property types at 2.82% (City of Toronto, 2016). While this rate, with the combination of increasing industrial land values, does provide the city with significant revenue it also poses a challenge in maintaining competitiveness. With other municipalities charging significantly lower industrial property taxes, such as the City of Vaughan at 0.02%, industrial land becomes increasingly attractive outside of the city for small-scale manufacturers (City of Vaughan, 2015).

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2015 PROPERTY TAX RATES CITY TAX RATE %

EDUCATION TAX RATE %

TRANSIT TAX RATE %

TOTAL TAX RATE %

0.5081190

0.195

0.0024847

0.7056037

MULTI-RESIDENTIAL

1.5290188

0.195

0.0025294

1.7265482

NEW MULTI-RESIDENTIAL

0.5081190

0.195

0.0024847

0.7056037

COMMERCIAL

1.5361843

1.2278260

0.0025294

2.7665397

RESIDUAL COMMERCIAL BAND 1

1.2811685

1.2278260

0.0021095

2.5111040

RESIDUAL COMMERCIAL BAND2

1.5361843

1.2278260

0.0025294

2.7665397

INDUSTRIAL

1.5301969

1.2946100

0.0025294

2.8273363

PIPELINES

0.9773995

1.5065730

0.0047794

2.4887519

FARMLANDS

0.1270297

0.0487500

0.0006212

0.1764009

MANAGED FORESTS

0.1270297

0.0487500

0.0006212

0.1764009

DESCRIPTION

RESIDENTIAL

TABLE 1

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3 RESEARCH To ensure a comprehensive understanding of the challenges that face small-scale manufacturers in Toronto, both primary and secondary research was conducted. Survey research was used to gain first-hand perspective into the current challenges and opportunities facing small-scale manufacturers. Secondary research was conducted to gain an in-depth understanding of smallscale manufacturing and was used to inform the interim report and the development of questions for the questionnaire. Both the survey results and the secondary research have been used to develop the definition of small-scale manufacturing and the recommendations in this report. The following section will provide a summary of methodology and findings.

3.1 SECONDARY RESEARCH Secondary research was performed to ensure an understanding of the current and historical issues facing small-scale manufacturers in Toronto. This research includes the historical context of manufacturing trends in Canada, municipal and provincial land use policy with a particularly focus on manufacturing within the City of Toronto, as well as current industrial real estate market trends and labour challenges.

This research was used to formulate an interim report and inform survey questions, as well as the recommendations provided in this report.

SUMMARY OF FINDINGS Historical Context of Manufacturing in Canada Canada’s manufacturing industry was once a strong and robust sector of the national economy. By the mid-twentieth century, the development of nationwide manufacturing policies and the Canadian Manufacturers Association resulted in a manufacturing sector that comprised of 25% of Canada’s workforce (Laurent J, 2006).

However, the rise of globalization through newly expanding economies and new trade agreements were detrimental to the manufacturing sector within Canada. This was due to the outsourcing of routine manufacturing jobs to countries with cheaper labour costs. As a result, Canada’s manufacturing industry lost approximately 278,000 jobs from 2000 to 2007 (Statistics Canada, 2016).

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225 Sterling Rd A. Guidoccio

A HISTORICAL CONTEXT OF MANUFACTURING:

2.

1.

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Canada signed several trade agreements, including the APTA (1965), GATT (1947), and NAFTA (1992), further increasing the Nation's global competitive advantage.

The Canadian Manufacturing Industry was once strong & robust. It comprised 25% of Canada’s workforce in the mid-twentieth century.

TORONTO + CANADA 4.

3.

Locally, many of Toronto's Manufacturers capitalized on the opportunity of accessing the larger global market and have relocated to the GTA.

Trade Agreements eventually led to the outsourcing of many Canadian Manufacturing Jobs. Approximately 278k jobs were lost between 2007 and 2008.

5.

The City of Toronto provides an important opportunity to reverse some of these negative trends locally. The City represents an opportunity for a cultural shift that demands locally produced and sourced goods.

The outsourcing of manufacturing jobs overseas was also accompanied by a shift in national employment to the service industry. Overall, these shifts reflected a decline in national manufacturing employment, from 16% to 12% (Statistics Canada, 2016).

Ontario and Quebec experienced the bulk of this loss with a decline of 90% of their manufacturing employment since 2002 (Statistics Canada, 2007). The transition of manufacturing jobs to offshore production with cheaper labour and the push for service sector jobs was intensified by the 2008 global recession.

Provincial and Municipal Planning Framework The Ontario Provincial Policy Statement (PPS) was adopted in 1996 and was most recently updated in April 2014. It works together with provincial plans and legislation to create an effective and efficient land use planning system. It provides policy direction on a wide range of provincial land use interests including economic prosperity and employment.

The PPS focuses on efficient land uses and development patterns that support sustainability through the promotion of, “strong, livable, healthy and resilient communities, protecting the environment and public health and safety, and facilitating economic growth� (p. 6). This is achieved through an appropriate mix of land uses including residential, employment, and institutional, supported by appropriate infrastructure and public service facilities (PPS, 2014.).

Section 1.3 Employment, provides direction regarding economic development and Employment Areas. This section creates a powerful tool for municipalities to preserve space and plan for employment land uses, including manufacturing.

The Growth Plan for the Greater Golden Horseshoe is a subset piece of provincial legislation under the PPS. This policy directive under the Places to Grow Act, 2005, was introduced in 2006, to manage urban and suburban growth in both upper-and single-tier municipalities (Ministry of Municipal Affairs and Housing, 2016). This is achieved by supporting urban intensification, revitalized downtown cores, reimagined suburbs, an efficient regional transit network, as well as protected agricultural and natural spaces (White, 2007).

The Growth Plan contains directives with regard to Employment Areas, in which manufacturing is specifically mentioned. These directives are contained in section 2.2.6. of the Plan by framing manufacturing as a key feature of the region’s economy.

In addition to provincial land use policies, the City of Toronto uses a series of policies and legal designations to control and manage development growth.

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The City of Toronto’s current Official Plan was adopted in 2002 and most recently updated in 2015. One key principle is to create a Toronto where people “can all continue to build livelihoods for themselves and their families”, and these are represented throughout the majority of policies in this plan (Toronto, 2015). The Toronto Official Plan provides direction for planning for employment land uses within the city.

Official Plan Amendment (OPA) 231 is one of the most important policy mechanisms for protecting and supporting manufacturing within the City of Toronto. However, since being passed, over 178 appeals have been forwarded to the Ontario Municipal Board (City of Toronto, 2016). After several pre-hearings and mediation, much of the amendment is still undergoing the appeal process. The purpose of this amendment is to protect all Employment Areas in Toronto from redevelopment pressures caused by adjacent sensitive land uses. The re-classification and definition of Employment Areas is one of the key components of OPA 231. Under the previous definition, Employment Areas were smaller in scale and did not have the same level of protection as Employment Districts. Whereas Employment Districts are larger, more traditional industrial areas that face less threat from sensitive land use conversions. On recommendation from the Sustainable Competitive Advantage report, OPA 231 removes the distinction between “Employment Areas” and “Employment Districts” so that all employment designation receive the same protection.

To manage the development of land parcels and encourage specific growth within different areas across the city, the City of Toronto uses zoning bylaws. The Zoning Bylaw 569-2013 of the City of Toronto designates lands as Residential, Commercial, Employment, Institutional, Open Space, or Utility and Transportation.

TABLE 2 provides a detailed breakdown of the zoning in which manufacturing is permitted to exist.

Current Industrial Real Estate Market Trends Currently, Toronto has the strongest industrial land market in Canada. This is highlighted by the lowest availability rates and a strong capitalization rate when compared to other major Canadian industrial markets (CBRE Ltd, 2016). Nearly $2.2 billion of industrial land investment will take place in Toronto during 2016, and an increase of nearly $400 million compared to investments made in 2015 (CBRE Ltd, 2016). This is over $1.2 billion more than both Vancouver and Montreal (CBRE Ltd, 2016). Toronto is also experiencing record industrial sales prices. Between 2014 and 2016 the average asking industrial sale price per square foot has grown from $88.45 to an expected $112.50 (CBRE Ltd, 2016). (Refer to Table 3) By the end of 2015, Toronto had an industrial land inventory of roughly 275 million square feet (CBRE, 2016). A majority of this land is located in North York, Scarborough, and Etobicoke which combine for nearly 237 million of the city’s industrial land inventory. The down-

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ZONING BY-LAW

ADDITIONAL INFORMATION

Residential Apartment Commercial (RAC)

Manufacturing uses in Residential zones

Artist studios or custom workshops, very limited used

Commercial Residentail (CR) & Commercial Employment (CE)

(CR) allows custom workshops, vehicle service shops (CRE) permits manufacturing uses that don’t conflict residential land uses

(CR) Strict floor space limitations (CRE) used along King, Richmond, and Adelaide near Spadina and Sherbourne.

Employment Light Industrial (EL)

Allow most common manufactur ing uses

Only for floor areas under 5,000 square feet

Employment Industrial (E) zones & Employment Heavy Industrial (EH) zones

(E) All manufacturing with a list of heavy industrial use exceptions

(EH) Does not allow Ammunition, Firearms or Fireworks Factories, Crude Petroleum Oil or Coal Refiner ies, Explosives Factories, or Tanner ies

Employment Office (EO)

(EH) No restrictions excluding several specific operations Common light manufacturing operations

Permitted with some restrictions on floor area

TABLE 2

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PERMITTED USES

225 Sterling Rd A. Guidoccio

town core’s inventory is only a rough 23 million square feet, and has a very low vacancy rate at 0.2%, and availability rate at 0.4% (CBRE Ltd, 2015). Due to the strong competition for industrial land in the downtown core, the average asking lease rate is $7.27 per square foot while the average asking sale price is $225.45 per square foot (CBRE Ltd, 2015).

Given Toronto’s expected growth in population and employment, as projected by the Ministry of Finance in 2012, Toronto will need to construct an additional 11.2 million square feet of industrial space to sustain manufacturing employment by 2031 (Malone Given Parsons, 2012). This increase can be represented by roughly 373,000 square feet of industrial space per year (Malone Given Parsons, 2012). However, based on projections from the Places to Grow Act it is estimated that Toronto will need an additional 18.2 million square feet of industrial space in order to meet growth projections for 2041, an increase of roughly 911,000 square feet per year (Malone Given Parsons, 2012).

Labour Challenges The demand for skilled labour for manufacturing industries is growing, and meeting this demand is a challenge for many of Toronto’s manufacturers. According to a recent poll conducted by the Canadian Apprenticeship Forum and Skills Canada, 42% of youth claim they are unlikely to consider a career in skilled trades and 71% of students claim their guidance counsellors do not encourage skilled trades professions (White, 2013). This problem is not unique to Ontario: in their 2011 Small and Medium Enterprises survey, Industry Canada has found that 37% of small- and medium-sized manufacturers cite a shortage of labour as an obstacle to expansion (White, 2013).

Currently, federal and provincial governments are working together to address this problem. The Canada-Ontario Job Grant is a product of collaboration between the Government of Canada and the Government of Ontario. Through this program, the Government of Ontario is providing two pilot grants; The Customized Training Grant, which will assist in the development and delivery of firm-specific training solutions that meet employers’ workforce development needs, where no such training exists; and the UpSkill pilot, which will support employers in participating sectors meet their workforce development needs by providing employees with short-term technical and essential skills training which align with the shared needs of the sector (Government of Ontario, 2014)

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2014

2015 F

2016 F

AVAILABILITY RATE

4.4%

4.1%

4.3%

NET RENTAL SPACE

$5.19

$5.33

$5.89

$88.42

$110.00

$112.50

5.57

6.90

3.60

5.23-7.50

5.00-7.50

5.00-7.00

NEW SUPPLY

5.83

4.58

5.44

UNDER CONSTRUCTION

7.00

7.21

5.02

(per sqft)

SALE PRICE (per sqft)

ABSORPTION (per sqft in millions)

CLASS A + B CAP RATE (%)

(per sqft in millions)

(per sqft in millions)

YoY

2016 MARKET OUTLOOK REPORT

TABLE 3

CBRE LTD

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SURVEY RESEARCH Primary research was conducted through a survey to gain first-hand insight into the opportunities and challenges facing small manufacturers in Toronto . A questionnaire was distributed to survey small-scale manufacturers in Toronto through an online survey format, telephone interview, and in-person interviews. The purpose of the questionnaire was to understand the characteristics of small-scale manufacturers, their land-use contexts, support systems, and individual insight into the urban context of small-scale manufacturing. An emphasis was placed on asking qualitative questions, allowing for open dialogue to gain in-depth understanding of the strengths, needs, and opportunities in manufacturing communities in Toronto.

In total, twelve questionnaires were completed online, six by phone, and twenty one in-person site visits were performed. Site visits were emphasized to gain a better contextual understanding of the needs and challenges of different types of manufacturing, as well as the types of spaces used by small-scale manufacturers. Survey respondents were located across the city, with the majority located in the western employment lands. Respondents represented a diverse range of manufacturing industries, including;

Breweries (3 respondents)

Ceramics (3 respondents)

Fashion and Apparel (6 respondents)

Food & beverage production (7 respondents)

Furniture and Woodworking (8 respondents)

Textiles (2 respondents)

Metal workers and machinists (3 respondents)

Printmakers (2 respondents)

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3.2 SITE PROFILES Small-scale manufacturers across Toronto represent an incredibly diverse set of businesses. To inform this report, businesses representing many facets of manufacturing were interviewed, as will be described in detail in Section 5. The following profiles provide a sample of some of the individuals and businesses which make up Toronto’s small-scale manufacturing sector.

The site profiles address the following:

· The location of the manufacturer · Zoning, site, and building information · Where they sell their products - local, regional, or national · Whether they rent or own their space · How many people they employ - if any

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1 ALISSA COE SITE PROFILE

NEIGHBOURHOOD Name: Junction Triangle Adjacent Zoning: Residential, Industrial, Commercial LAN E

D WAR

E AV

WN SDO

CNR

SITE Zoning: Employment Industrial Land Use: Manufacturing/Commercial/Residential Lot Area:4 acres Loading Docks: 8

ST

E

CE AV

A WALL

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BUILDING Owner: N/A Building Area: 990 sqft of 38,000 sqft Number of Floors: 4 Ceiling Height: 16’ Open to Public: No

224 Wallace Ave Unit 109

LOCAL

Alissa Coe is a Toronto based ceramicist, sculpter, and designer. Alissa strives to create objects that captureboth the elegance and strength of the natural world by using minimal form, fine materials, with attention to detail. She currently works in a 990 sqft shared studio space on Wallace Avenue.

RENT

SOLE EMPLOYEE

REGIONAL

NATIONAL

OWN

OTHER

1-5 EMPLOYEES

10+ EMPLOYEES

2 BROTHERS DRESSLER SITE PROFILE

NEIGHBOURHOOD Name: Brockton Village Adjacent Zoning: Residential, Industrial, Commercial R ST

BLOO

W

SITE Zoning: Residential Land Use: Manufacturing/Commercial/Residential Lot Area: 3.6 acres Loading Docks: 5 CNR

H

RT

PE

BUILDING Owner: Sterling Studio Lofts Inc. Building Area: 5,000 sqft of 90,000 sqft Number of Floors: 1 Ceiling Height: 14’ Open to Public: No

E AV

24

D

ING R

STERL

225 Sterling Road Unit 16

LOCAL

Brothers Dressler are material based furniture, lighting, and object designers that work out of their 5000 square foot studio space on Sterling Road. They are known for exclusively using ecologically friendly, reclaimed, and local materials for all of their work.

RENT

SOLE EMPLOYEE

REGIONAL

NATIONAL

OWN

OTHER

1-5 EMPLOYEES

10+ EMPLOYEES

3 COLOUR CODE PRINTING SITE PROFILE

NEIGHBOURHOOD Name: Roncesvalles Adjacent Zoning: Residential, Commercial H AVE

S WABA

EN

AUR

SOR AVE

E

HT AV

WRIG

SITE Zoning: Employment Industrial Land Use: Manufacturing/Commercial/Residential Lot Area: 0.6 acres Loading Docks: 2 BUILDING Owner: Jodno Ltd. Building Area: 550 sqft of 42,000 sqft Number of Floors: 4 Ceiling Height: 14’ Open to Public: No

251 Sorauren Ave Unit 104

LOCAL

Colour Code is an independent printing and publishing studio based in Toronto. They occupy 550 square feet of a shared industrial loft space on Sorauren Avenue.

RENT

SOLE EMPLOYEE

25

REGIONAL

NATIONAL

OWN

OTHER

1-5 EMPLOYEES

10+ EMPLOYEES

4 JENNIFER FUKUSHIMA SITE PROFILE

NEIGHBOURHOOD Name: Kensington-Chinatown Adjacent Zoning: Residential, Commercial, Mixed Use

SPA

VE NA

GTO

VE AA

SIN

DIN

KEN

AS ST

DUND

W

SITE Zoning: Commercial Residential Land Use: Manufacturing/Commercial Lot Area: 0.9 acres Loading Docks: 1 BUILDING Owner: N/A Building Area: 650 sqft of 17,000 sqft Number of Floors: 6 Ceiling Height: 10’ Open to Public: No

310 Spadina Ave Suite 403A

LOCAL

Jennifer Fukushima sells women's clothing and accessories made exclusivelt of upcycled and eco-conscious materials.

RENT

SOLE EMPLOYEE

26

REGIONAL

NATIONAL

OWN

OTHER

1-5 EMPLOYEES

10+ EMPLOYEES

5 TORONTO POPCORN CO. SITE PROFILE

NEIGHBOURHOOD Name: Kensington-Chinatown Adjacent Zoning: Residential, Commercial, Mixed Use SITE Zoning: Commercial Residential Land Use: Manufacturing/Commercial Lot Area: 0.3 acres Loading Docks: 0

AU ST

NASS

VE AA

DIN

BALD

SPA

T WIN S

GTO

SIN

KEN

BUILDING Owner: Landlord lives above Building Area: 1200 sqft of 2400 sqft Number of Floors: 2 Ceiling Height: 10’ Open to Public: Yes

VE NA

147 Baldwin Street

Toronto Popcorn Company was started by Joseph Villegas as a small business in his house that manufactured premium popcorn snacks in 2013. When the business expanded beyond the ability of his home, he relocated to a retail/manufacturing space in Kensington Market on Baldwin St.

27

LOCAL

RENT

SOLE EMPLOYEE

REGIONAL

NATIONAL

OWN

OTHER

1-5 EMPLOYEES

10+ EMPLOYEES

6 HALO BREWERY SITE PROFILE

NEIGHBOURHOOD Name: Junction Triangle Adjacent Zoning: Residential, Industrial, Commercial S LAN NE

DOW

CNR

AVE

D WAR

SITE Zoning: Commercial Land Use: Manufacturing/Commercial/Residential Lot Area: 0.7 acres Loading Docks: N/A

ST

E

CE AV

A WALL

BUILDING Owner: N/A Building Area: 1300 sqft Number of Floors: 2 Ceiling Height: 15’ Open to Public: Not yet

247 Wallace Ave LOCAL

A small Toronto brewery-under-construction that specializes in unique and surprising flavours. Opening Spring 2016 in the Junction Triangle.

RENT

SOLE EMPLOYEE

28

REGIONAL

OWN

1-5 EMPLOYEES

NATIONAL

OTHER

10+ EMPLOYEES

LEGEND INTERVIEW/SURVEY RESPONDANT

3.3 SUMMARY OF FINDINGS - SURVEY RESEARCH Interview and survey findings were analyzed to identify common trends, patterns in attitudes concerning the manufacturing industry, and other like elements. Insights on small manufacturers in Toronto were gathered through manifest and latent coding of results. This analysis tool involves noting and counting common words and terms found in the survey data, to help identify common themes. These findings also inform the recommendations for manufacturing in Toronto, as like ideas and themes are identified through the presence of common words.

Survey respondents were predominantly from within the city centre, While some commonalities between manufacturers responses are related directly to their particular industry, key recurring phrases and ideas were recognized across all sectors. The following list identifies some of the key relationships found within the research data:

· Business descriptions focused around three de ning terms: custom, artisan, and local.

· Workspace security and affordability was the leading challenge noted by manufacturers, using keywords such as a affordability

and instability.

· Growing businesses commonly describe expansion as a key challenge.

· Manufacturers often start as home businesses. Several different industries cited their initial location was at home:

Apparel, Ceramics, Eyewear,

Food and Beverage,

Interior Design,

Metal Work

When questioned about what they liked about locations, almost one-third of respondents emphasized the ability to walk to work, and walkability within their neighbourhood as a positive factor in site choice.

Companies manufacturing high end, high quality products often responded that competing in a market where manufacturing costs are cheaper overseas is a challenge. One respondent noted, “The greatest challenge is getting the word out and being competitive with companies that have far lower manufacturing costs because they outsource to overseas. Where other companies have significant margins to spend on marketing, we spend all of our margins on manufacturing.”

30

In person interviews allowed for more dialogue and detailed responses. While these responses varied, common themes arose through more informal discussion with the respondents. Three key challenges were identified and should be explored in greater detail to fully understand the challenges facing small-scale manufacturers:fully understand the challenges facing small-scale manufacturers: LACK OF APPROPRIATE SPACES AND RISING RENTS: With the competitive real estate market in Toronto, many small-scale manufacturers describe challenges of finding and maintaining affordable lease rates. Some respondents described how they are forced to relocate every few years as leases run out and their rent rises. Five respondents said moving to Hamilton was a very likely choice in the next few years, and others mentioned other locations outside of Toronto. Overall, 37% of respondents claimed unaffordability and instability in leases or the possible future redevelopment of their space, was a challenge.

FIGURE 3 CHALLENGES WITH REGARD TO SPACE 100 90

PERCENTAGE (%)

80 70 60 50 40 30 20 10 BEVERAGES

FASHION

FOOD

FURNITURE

SECTOR UNAFFORDABILITY

INTERIOR

PRINTING

OTHER

SECURING WORKSPACE

31

BENEFITS OF A MIXED-USE AREA: Many respondents described the advantages of locating in mixed-use areas the city, including their proximity to their client base, other manufacturers, and transit. Overall, 29% of respondents claimed that their surrounding neighbourhood positively influenced their business, 29% of respondents claimed that their proximity to their customers was locational benefit, proximity to a public transit network was a locational benefit for 26% of respondents, and 15% claimed their proximity to other manufacturers was a benefit.

FIGURE 4

BENEFITS OF CURRENT SITE- BY SECTOR

100 90

PERCENTAGE (%)

80 70 60 50 40 30 20 10 BEVERAGES

FASHION

FOOD

NEIGHBOURHOOD PROXIMITY TO CUSTOMERS/CLIENT

FURNITURE

SECTOR

INTERIOR

PRINTING

OTHER

PROXIMITY TO OTHER MANUFACTURERS/SUPPLIERS PROXIMITY TO TRANSIT

BUSINESS GROWTH AND EXPANSION: While there are systems in place to help businesses start up and become viable, many manufacturers lamented over the lack of support to help expand and grow. 25% of respondents said outgrowing their space was currently an issue or would be in the near future. Often, overhead costs for machinery, packaging systems, and expansion of floor space requirements can be financially prohibitive. A brewer described that the cost of doubling their production, from 5 to 10 hectolitres, would incur up to $500 000 in facility investments.

32

DISTRIBUTION AND EXPOSURE CHALLENGES: Several respondents claimed that exposure was a barrier to their growth, often stating that further support promoting a variety of locally made goods was necessary. For many respondents, producing locally means capital is reinvested to cover manufacturing costs, leaving only a small budget for advertising, marketing, and exposure expenses. Furthermore, high labour and manufacturing costs make competing with overseas markets difficult at home, as less expensive, imported products can still undercut local manufacturer’s prices.

FIGURE 5

CHALLENGES FACING SMALL-SCALE MANUFACTURERS

100 90

PERCENTAGE (%)

80 70 60 50 40 30 20 10 BEVERAGES

FASHION

FOOD

FURNITURE

INTERIOR

PRINTING

OTHER

SECTOR SECURING WORKSPACE

DISTRIBUTION

EXPOSURE

HIGH LABOUR COST

FINDING SKILLED LABOUR

IDENTIFYING KEY THEMES; By identifying shared challenges facing small-scale manufacturers, steps can be taken to utilize existing and developing new policy and planning frameworks to promote the necessity and viability of small-scale manufacturing in Toronto.

The most common challenge tends to be focused on securing affordable space in accessible and central areas. Having a stable, affordable and accessible location plays an important role for small-scale manufacturers as they start up and expand.

33

Relying on a local network with proximity to customers, suppliers, other manufacturers, and a dense population of consumers is beneficial to small-scale manufacturers who have challenges marketing and distributing their products. If affordable space continues to disappear, small manufacturers will be forced to the fringes of the city, or other municipalities which was an identified theme amongst respondents. This move can create a disconnect between manufacturers and their client base. Causing manufacturers to invest more can have negative impacts, as time and money must be invested to connect with new and existing clients, suppliers, and consumers. One furniture maker explained that moving to Prince Edward County will require their management to take three or four day trips into the city each week to meet with clients and suppliers. If this trend continues, only larger manufacturers, those with strong international client bases, and high end, boutique retailers will be able to afford spaces in Toronto.

There is also a trend towards custom, specialized products. Technologies have allowed both the production and promotion of specialized products to become more popular and affordable. While these producers have to compete with cheaper manufacturing costs globally, promoting the artisan and specialized element of these products can yield positive results for manufacturers in Toronto.

34

1 Henderson Brewery K. Mikelsteins

4 DISCUSSION Considerable insight was acquired through both the survey and secondary research that was conducted for this report. The following section will provide a detailed analysis of these findings.

Provincial Planning Framework Considerable insight was acquired through both the survey and secondary research that was conducted for this report. The following section will provide a detailed analysis of these findings.

4.1 PROVINCIAL PLANNING FRAMEWORK Both the PPS and the Growth Plan are guiding land use policies that promote sustainable development by creating complete communities that support a combination of live, work, learn, shop, and play, with diverse employment opportunities and efficient regional and local transit access. However, secondary research conducted for this report identifies a gap in the Growth Plan that fails to address the important needs of small-scale manufacturers.

64% of survey respondents highlighted the importance of remaining in a “complete community” location, where either their neighbourhood atmosphere, proximity to other manufacturers, proximity to customers and proximity to transit networks were benefits to their business location.

However, the language of the Growth Plan makes it difficult for small-scale manufacturing to be a component of a complete community. In section 2.2.6.9, the Plan defines the needs of manufacturers as those who need access to major arterial transportation networks. As a result, the Growth Plan indicates that the appropriate areas for manufacturing would be located along major highways, railways and near airports. This is an important component for Ontario’s large and medium sized manufacturing sector, as they rely on larger domestic or international networks for resources and markets, but does not represent the resource networks and consumer markets of small-scale manufacturers. Based on survey results, 64 % of survey respondents indicated that their target market was local; 24% claimed that Toronto was the location of target market, 19% stated the Greater Toronto Area was their target market, and 22% stated Ontario was the location of their target market.

In addition, the areas in which manufacturing is encouraged to exist in the Growth Plan are often not serviced by regional or public transit links and do not promote walkability, high densities or a mix in land uses. In addition, section 2.2.6.4 states that employment uses, such as office areas, should be located in central urban districts and transit hubs. The section makes no reference to manufacturing as an acceptable land use within central urban districts and transit hubs. Thus making it even more difficult for small-scale manufacturers to be situated in a “complete community” area, as described above.

36

The sections of the Growth Plan that address manufacturing, are not reflective of the needs of small manufacturers in the Greater Golden Horseshoe (GGH), making it difficult for manufacturers to situate themselves within provincial land use policy. Although the Growth Plan focuses on regional growth management, the language and discourse around the plan has an influential role in the planning practices and policies seen in the City of Toronto, particularly affecting small-scale manufacturers.

4.2 CITY OF TORONTO One of the greatest challenges facing the City of Toronto with regard to manufacturing is the rapid depletion of diverse Employment Areas throughout the city and the current state of the industrial real estate market. This includes a limited land supply and affordability of space.

As of 2012, the City of Toronto has an estimated 1,740 acres of vacant space across all of its employment districts and lands (Malone Given Parsons Ltd, 2012). Based on this figure, the city tentatively has an adequate supply of industrial land that would satisfy the growth projections of 2041. Care should be taken to prevent the loss of more employment lands, so as to not put strain on the land supply in the future (Malone Given Parsons Ltd, 2012)

4.3 CURRENT STATE OF EMPLOYMENT LANDS IN TORONTO The strongest mechanism the City has to support manufacturing growth is through the retention of current employment lands from the threat of encroaching residential or commercial land use conversions. This threat is reflected in the 146 employment land conversion requests considered in the last five Municipal Comprehensive Reviews (City of Toronto, 2014).

路 Due to a confined geographic boundary, it is estimated that Toronto will run out of vacant land between 2031-2041 (Malone Given Parsons, 2012). This geographic constraint, combined with the pressure to convert to residential, makes employment lands a finite resource in Toronto. 路 The new protection of employment lands through OPA 231 is essential if the City wants to protect this limited supply of lands from re-conversion applications. 路 The Toronto Official Plan, in Section 2.2.4, recognizes that due to these pressures, intensive development should be en couraged on this limited supply of land in order to accommodate a diverse range of future employment and economic demands.

Given the rising sales price of industrial land within the downtown core there is a current trend of industrial property owners liquidating their land or increasing their lease rates. This trend is forcing manufacturing employment out of the downtown core and 37

into the fringes of Toronto where the land availability is higher and lease rates are lower. Evidence of this can be seen within the inner-city Junction Triangle, particularly at the Perth-Sterling Revitalization development. The interview participants of 213 Sterling Road explained the property recently increased its leasing rate by 55%, driving out most of the buildings local manufacturers. This revitalization development represents increasing challenges facing small manufacturers who wish to remain in mixed-use areas.

As the average asking leasing rates in the City are $7.27 per square foot (CBRE Ltd, 2015), available low rental cost industrial land has disappeared from the downtown TORONTO’S DOWNTOWN INDUSTRIAL LAND (Refer to Table 4). One survey responINVENTORY VS ALL OF TORONTO dent stated that the lack of available affordable appropriate space was making it increasingly difficult to be creative in the city, and many of the respondents 23 million sqft friends were relocating to Hamilton.

DOWNTOWN CORE INVENTORY

Protecting existing employment land set the foundation to support a healthy ALL OF TORONTO and diversified economic future. Ensuring that these lands are operating at full 275 million sqft capacity is essential in achieving Toronto’s employment intensification goals as set out in the provincial Growth Plan.

This protection is especially important for attracting new manufacturing firms.

Between 2014 and 2015, four out of five new manufacturing establishments located in Employment Areas (City of Toronto, 2015). As evidenced through FIGURE 9 case studies across five other major North American Cities in Long-term Employment Land Strategy City of Toronto, Toronto is seen as a leader in the maintenance of its existing employment land, thus demonstrating an opportunity to intensify employment within the City’s boundaries (Hemson Consulting). However, it is important that protected employment lands provide an opportunity for a wide variety of employment uses. Although, under the Former General Zoning Bylaw, the Perth Sterling revitalization development will replace traditional industrial and manufacturing employment uses with a mix of residential, office, commercial and retail uses.

38

TORONTO INDUSTRIAL MARKETVIEW Q4 2015 CBRE LTD.

TABLE 4

(S/SF) (SF)

(%)

(%)

(SF)

(SF)

(SF)

Q4 2015 NET ABSORP.

2015 NET ABSORP.

UNDER CONSTR.

(S/SF)

AV. NET AV. NET ASKING ASKING LEASE RATE SALE PRICE

SUBMARKET

INVENTORY

VACANCY RATE

AVAIL. RATE

PICKERING

9,457,322

1.0

3.5

34,702

486,530

-

5.10

74.73

AJAX

7,499,341

0.3

2.6

30,232

81,688

-

3.65

63.78

WHITBY

6,092,186

9.9

11.8

(128,806)

(199,146)

-

5.26

55.05

OSHAWA

27,093,966

3,5

4.9

(375,670)

(467,107)

70,000

4.17

57.40

TORONTO EAST

50,142,815

3,2

5.1

(439,542)

(98,035)

70,000

4.56

59.45

TORONTO

23,064,534

0.2

0.4

54.993

254,172

-

7.27

222.45

NORTH YORK

87,026,467

1.3

2.4

(56,163)

225,692

45,000

4.88

88.10

SCARBOROUGH

68,184,630

1.8

3.0

40,976

138,069

80,000

4.61

108.78

ETOBICOKE

81,254,171

1.6

3.5

(111,678)

47,766

-

4.31

100.72

EAST YORK

7,991,140

0.4

0.6

4,564

57,926

-

6.29

204.55

YORK

7,179,602

0.3

0.3

157,959

19,481

-

5.95

115.58

2.6

90,651

743,106

125,000

4.61

101.57

TORONTO CENTRAL 274,700,544

1.4

39

Brothers Dressler Studio A. Guidoccio

4.4 LAND USE CONFLICT IN MIXED USE NEIGHBOURHOODS There is no doubt of the important role that protected Employment Areas play in providing prime space for small-scale manufacturing to exist within Toronto. However, finding suitable locations for small-scale manufacturers that fit their needs can be more difficult. For many small-scale manufacturers, producing for a local market is a top priority. As stated in the survey findings, a majority of business descriptions focused around three defining terms: custom, artisan, and local.

For the food and beverage industry, the idea of producing local products is a cornerstone to their success. The City of Toronto has indicated that “local” has become a significant emerging trend for this industry, stating that consumer demands for local products have food and beverage manufacturers focusing on meeting this demand, particularly in Toronto (City of Toronto, 2016). Several of the food and beverage manufacturers who participated in the primary research drew attention to the local demands of their consumers, stating a particular interest on being a local neighbourhood brand or providing consumers with local products sourced from local ingredients.

Small-scale urban manufacturing has an enormous advantage in meeting the demands of these emerging locally-driven markets. Manufacturing goods in a mixed-use environment helps to create favorable ‘geographic stories’ that make these goods more attractive than those from other places (Curran, 2010). In addition, local manufacturing provides opportunities to increase flexibility in the design and style of the goods produced, helping to keep industry sectors motivated and innovative, and ultimately provide more choice for the consumer (Yunosov, 2014).

One respondent who manufacturers beauty products offered insight into the importance of small-scale manufacturing, “[Local manufacturing] specifically adds to the culture and brand awareness of what it means to be made in Toronto, not only on a local level but globally. This is a vehicle to bring a triple bottom line company perspective and worldview to the global stage.” The respondent continued to say, “This type of manufacturing sector creates an overall benefit to the community at large not only in providing products necessary to the health and wellness of a community but in enriching the simple aesthetic texture and relationship building through small enterprise, employment and as acting as an avenue to educate and incubate ideas. The information shared in the customer community, business network and global network is invaluable in comparison to the involvement taken by many established corporate models or imported brands.”

However, small-scale manufacturing is not often a compatible and easily adaptable land use. Manufacturing land uses in mixed-use areas may pose negative externalities to neighbouring uses, including noise, odours, air pollution, and increased traffic (Wood Bull LLP, 2015).

While large portions of land have been designated for employment, many small-scale manufacturers can operate within smaller spaces in mixed-use neighbourhoods.

41

However, conflict or competing interests with neighbours can lead to challenges for small-scale manufacturers. In some cases, complaints from nearby sensitive uses can force manufacturers to operate under reduced hours or incur costs for mitigation measures, affecting the productivity of their business (Ibid.), 100% of the survey respondents who noted challenges with surrounding land uses were located within Commercial Residential (CR) zoning.

For small-scale manufacturers, locating a work space or shop can come down to the permitted land use laid out in the zoning bylaw. The Zoning Bylaw defines a manufacturing use as “the use of premises for fabricating, processing, assembling, packaging, producing or making goods or commodities, and it includes repair of such goods or commodities”. Although this definition is written in the zoning code, the modern reality of manufacturing allows a broader interpretation. Such uses as a Custom Workshop or a Service Shop can allow small-scale manufacturing.

The Commercial Residential Employment (CRE) zone can be a way to address this gap in employment zones and cater to smallscale manufacturers. Promoting the usage of this zoning, with proper public consultation, can provide needed support for small urban manufacturers.

EMPLOYMENT CHANGE IN ONTARIO’S MANUFACTURING SECTOR BY SKILL LEVEL In order to protect and enhance the Toronto small-scale manufacturing industries, planning and economic development policy must acknowledge and provide for its 2000 distinct factors and challenges. v16%

JOB REQUIRING COLLEGE DEGREE/ VOCATIONAL TRAINING

v25%

JOB REQUIRING ON THE JOB TRAINING

600000

400000

300000

v30.7%

500000

SECONDARY SCHOOL/ OCCUPACTION-SPECIFIC TRAINING

v17.3%

200000

The demand for skilled labour for manufacturing industries is growing, and meeting this demand is a challenge for many of Toronto’s small-scale manufacturers. Overall, surveys should that 26% of respondents claimed finding skilled labour as a challenge. Based on the findings of the Canadian Apprenticeship Forum and Skills Canada survey, increasing awareness of manufacturing jobs at the grassroots level, and ensuring that this opportunity is communicated to secondary school students and other job seekers, is particularly important.

2012

100000

4.5 SKILLED LABOUR

JOB REQUIRING UNIVERSITY DEGREE

FIGURE 7 42

However, labour trends in Ontario are a result of many different social and economic factors and addressing this particular challenge is beyond the scope of this report.

In response to the survey findings, additional research, and best practice case studies, three overall recommendations have been developed:

1. Creating and Supporting Mixed-Use Policies for Manufacturing

2. Creating Shared Spaces for Small-scale Manufacturers to Thrive

3. Developing a Strong Network of Support for Small-scale manufacturers These recommendations encompass policy changes which could be advocated for by Toronto Made and implemented by the City of Toronto.

43

MR. CHRISTIE CASE STUDY On November 1, 2012, Mondelēz Canada announced that it intended to close its Mr. Christie’s Bakery located at Lakeshore Boulevard and Park Lawn Road in Etobicoke. The closure of the 625,000 square foot factory, located on an eleven-hectare site, resulted in the loss of approximately 550 jobs (Pagliaro, 2012). The site had been facing a mounting number of constraints. The owners filed a request to redesignate from Employment Area to Regeneration Area, which would allow residential uses. This reflects the rapid redevelopment of the surrounding area, and the high value of the land for residential use which created motivation to close the factory. Pressure also came from land use conflict between the factory and condominium residents resulting from odours and high vehicle traffic to and from the site (City of Toronto General Manager, Economic Development and Culture and Chief Planner and Executive Director City Planning, 2013). Other challenges facing the business included poor transportation infrastructure, hydro issues resulting in local power outages, constraints in adapting the building to modern manufacturing, and the difficulty of operating within a 7am to 7pm curfew (City of Toronto Mr. Christie’s Site Working Group, 2013). The site currently remains designated an Employment Area, protecting the land from conversion to residential use. Following the closure, a working group was created involving planners, postsecondary institutions, residents associations, Mondelēz, and other stakeholders to develop a vision for the site. To date, guiding principles have been developed and various options discussed, however, no final plan for the site has been determined (City of Toronto Mr. Christie’s Site Working Group, 2013). Though not specific to small manufacturers, this case highlights some of the many challenges facing manufacturers in Toronto

44

5 RECOMMENDATIONS 5.1 RECOMMENDATION 1 – CREATING AND SUPPORTING MIXED-USE POLICIES FOR MANUFACTURING 5.1.1 COMMERCIAL RESIDENTIAL EMPLOYMENT – MANUFACTURING MIXED-USE ZONING

· Encourage the use of the Toronto Zoning Bylaw No. 569-2013 Commercial Residential Employment (CRE) designation in the development of Regeneration Areas.

· Develop a new Official Plan land use designation, Manufacturing Regeneration Areas, wherein a percentage of building space in the area must be developed or preserved for manufacturing. This subset of Regeneration Areas may be used in designated Regeneration Areas where the greater promotion of manufacturing is appropriate.

· Within Manufacturing Regeneration Areas, apply CRE zoning which sets maximum FSIs for commercial and residential uses which must amount to less than the overall permitted Floor Space Indexes (FSI) for the site.

45

Brothers Dressler Studio A. Guidoccio

REGENERATION AREAS As described in Section 4.7 of the Toronto Official Plan (2015), Regeneration Areas are intended to revitalize underused or outdated areas of the city and bring investment, development, and a diverse mix of uses to these areas to meet city growth goals. The land use and development strategies for these areas are unique and respond to the individual needs of the area. Regeneration frameworks must include urban design guidelines, a greening strategy, community improvement strategy, community services strategy, heritage strategy, and environmental and transportation policies. Frameworks are implemented through Secondary plans, as described in Section 5.2.1 of the Official Plan.

As part of Official Plan Amendment 231, the City redesignated seven areas across the city as Regeneration Areas, and initiated the required study in six of the seven areas. Currently, the Dufferin/ Wilson area and Tippett Road area are in the consultation and study stage, the Steeles-Redlea and Mimico-Judson area are in the draft policy stages, and the Dupont Street area and Bathurst-Strachan area have study, and had resulting policies adopted. The remaining area, Murray Road, has not moved ahead due to the appeal of portions of OPA 231 (City of Toronto, 2014).

An additional, significant Regeneration Area-designated part of the city is the Toronto Port Lands.

Currently the subject a number of planning studies, the Port Lands are an area of focus for the city due to their immense redevelopment potential. Thus far, development guidelines and plans for the area involve diverse, mixed uses, and an articulated effort to include small-scale manufacturers into this mix would contribute a valuable land use to the area (Waterfront Toronto, 2015).

47

COMMERCIAL RESIDENTIAL EMPLOYMENT ZONING Commercial Residential Employment (CRE) is a zoning designations under the City of Toronto 5692013 zoning bylaw to be used in Regeneration Areas. This zone allows a mix of commercial, residential, and industrial uses under the same zoning, providing an opportunity to create diverse mixed use areas.

The CRE zone permits a range of manufacturing uses, some unconditionally and some with conditions, primarily concerning the types of materials which may be used. Pharmaceutical, medicine, plastic, or clay manufacturing are not permitted in buildings with dwelling units.

48

This recommendation enhances the application of CRE zoning in Regeneration Areas by encouraging City of Toronto planners and potential developers to create more spaces that support manufacturing uses under the CRE zoning designation. To facilitate this, a complementary policy directive created under the Regeneration Area section of the Official Plan will create more prescriptive land use policy by allowing the application of CRE zoning with maximum commercial and residential FSIs which may not amount the total permitted FSI for any building. This tool will help City of Toronto planners retain and develop diverse ‘employment’ uses, making it possible for manufacturing to continue to exist throughout the City.

In the early 90’s, the City of Toronto was experiencing conflicts between existing zoning regulations in the downtown core and the reality of the current land use demand. The area of downtown Toronto, known as the “Kings” (King-Spadina and King-Parliament) were undergoing a difficult time attracting investment. Zoned for manufacturing, the decline in the manufacturing industry made it particularly difficult to encourage any new development in the area. In 1995, the area became a part of a study known as a “regeneration area”, in the effort to identify new ways of easing zoning restrictions and increasing the productivity of these prime lands (Canada Mortgage and Housing Corporation, 2016). As a result, a secondary plan was implemented with a new style of zoning.

The City of Toronto created the Commercial Residential Employment (CRE) designation to promote a less restrictive, mixed-use approach to land use planning that maximized land use productivity within designated Regeneration Areas (City Planning Division, 2014). Following the creation of the CRE designation in the 2013 zoning bylaw, it was applied to the Kings area. The intention was to provide a new tool that the city and developers could use to attract new businesses and residents to an area that would work in harmony with one-another based on their shared desire for prime location, city services and public spaces (Canada Mortgage and Housing Corporation, 2016).

This dynamic land use planning approach provides the necessary components for developers to provide unique spaces for a diverse mix of uses. It allows for:

49

· As-of-right development permission within general height limits; · Maximum flexibility in land use policies to permit new buildings and conversions of existing buildings to almost any use and the removal of density restrictions; · New built form regulations focusing on building height, massing and light, view and privacy standards; · The relaxation of a number of general bylaw standards regarding parking and loading for new buildings, with exemptions being given to existing and heritage building (Canada Mortgage and Housing Corporation, 2016)

In addition, all employment uses permitted under CRE would have to meet quantitative performance standards related to matters such as noise, odour and air quality emissions as a condition of receiving a building permit, encouraging appropriate employment uses that can coexist with residential uses (Canada Mortgage and Housing Corporation, 2016).

CRE zoning can be used to encourage mixed use employment areas that provide an opportunity for small-scale manufacturing, though the unfortunate reality is that CRE zoning makes it very easy for developers to convert industrial/manufacturing land uses for commercial/retail and residential uses.

Although the limited Regeneration Area policy mandates a percentage of employment to remain within the area, this policy can have an insignificant effect in underused areas where there is little remaining employment. Furthermore, in the Kings Regeneration Area, under both the current CRE zoning and the previous Reinvestment Area zoning, very little of the former industrial/manufacturing use has been retained. Instead, developers have used commercial land uses to meet employment targets. As a result, small-scale manufacturers were priced out of the market.

That is why creating a subset policy for Regeneration Areas in the Official Plan that encourages the site specific employment of manufacturing uses, is needed. This new policy directive, called Manufacturing Regeneration Areas, is a recommended tool for the City of Toronto to ensure that manufacturing can continue to exist in a competitive and affordable mixed-use urban environment that benefits its surrounding community.

It is important to note that while many of the employment uses under the “E� in CRE relate to manufacturing, a small range of non-manufacturing employment uses are available. This flexibility addresses the fact that manufacturing is not an appropriate use in all areas. The Manufacturing Regeneration Area designation helps to make this distinction and indicate when manufacturing uses should be emphasized.

IMPLEMENTATION The Toronto Official Plan uses land use designations as a key implementation tool to direct growth. Regeneration Areas are a land use designation used to create individual strategies for revitalizing underused or vacant areas of the city and promoting a broad mix of uses. While Regeneration Areas have policies in place to ensure a net gain of employment, (Otis, 2014) there is a lack of protection for manufacturing uses in Regeneration Areas.

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As indicated in the Discussions section of this report, conflicting land uses can pose a threat to urban manufacturing, as noise and other nuisances can cause disagreements with local residents. One brewery faced negative media attention as adjacent residents called them “bad neighbours” (Toronto Star, 2015). Manufacturing uses are not always found to be the highest and best use, and residential and commercial land uses may be favoured in Regeneration Areas shutting out manufacturing spaces.

One survey participant indicated that his reasoning for relocating to his current location was as result of rising rents and conflicts with surrounding land uses. For this reason, the addition of the following land use sub-designation under Regeneration Areas, to be added through an Official Plan Amendment, is necessary to protect manufacturing: SUCCESSFULLY INTEGRATING MANUFACTURING INTO MIXED-­USE DEVELOPMENT To promote a diverse economy and protect manufacturing jobs, Regeneration Areas should be designated as Manufacturing Regeneration Areas when appropriate. Within Manufacturing Regeneration Areas, Commercial Residential Employment ( CRE) zoning is preferred. An appropriate minimum portion of CRE zoned land should be reserved for manufacturing use in Manufacturing Regeneration Areas.

Because zoning in Regeneration Areas is implemented through Secondary Plans, the appropriate maximum commercial and residential FSIs can be determined on an individual area basis.

However, in Manufacturing Regeneration Areas, these FSIs should total less than the permitted FSI for a site, creating an incentive for developers to provide manufacturing space The majority of uses allowed under the “e” symbol in the Zoning By-law are manufacturing uses.

Currently, the zoning bylaw allows Commercial Residential (CR) zones to have maximum FSI permissions on each zone symbol.

For example, land zoned CR 2.0 (c1.0; r2.0) can have a combined FSI of 2.0 for all uses on the land, with a maximum of 1.0 FSI for

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Vancouver is an example of a city that has used a land use planning tool to promote mixed land use designations. Vancouver’s zoning bylaw has 8 different land use designations that fall under the Comprehensive Development District (CD) categorization.

These designations aim to regenerate areas that are underutilized throughout the entire City. The site specific zone (CD-­1) allows for a specific type of building use to encourage mixed use throughout the city. It is incremental in nature, since there is a separate bylaw for each CD-­1 zone (City of Vancouver, 2012). 955 East Hastings Street is an example of a site where a mixed use development was allowed under CD-­1 zoning (Strathcona Residents Association, 2012). Light industrial as well as commercial uses were conditionally permitted at grade, and the floors above grade were permitted for residential use.

(City of Vancouver, 2014)

commercial uses and a maximum of 2.0 FSI for residential uses. By applying this tool to CRE zones, lands can be zoned so that the highest and best use necessitates manufacturing. For example, a land zoned CRE 4.0 (c1.0; r2.0; e4.0) cannot achieve its maximum allowed density through only commercial and residential uses.

WHAT IS FSI? FSI, or Floor Space Index, is the gross floor area of all buildings on a lot divided by the lot area. It is a tool that is used by the City of Toronto planners, through the zoning bylaw, to apply land use development specifications to certain sites.

0 FSI

.25

0 FSI

0 0.5 FSI

.75

.25

1 FSI

FIGURE 8

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Junction Building J. McLeod

5.1.2 ENCOURAGING AND PROMOTING MANUFACTURING THROUGH CREATIVE MANUFACTURING DISTRICTS

· Establish Creative Economic Districts to promote the growth of existing manufacturing, and their networks, throughout the City of Toronto.

Creating, encouraging and promoting Creative Economic Districts will help generate support from the public and stakeholders, and demonstrate the viability of manufacturing in mixed-use areas. The City of Toronto has already encouraged official economic districts, based on an industry or historical context, that currently align with this recommendation. Emerging and existing examples include a Brewery District in the Junction, the Fashion District downtown and the Distillery District, which houses spaces for several small-scale manufacturers. The opportunity for manufacturers to locate within these areas provides a sense of place, a local network and valuable support from the industry and the community. These neighbourhoods also capitalize on good transit access and walkability, which many survey respondents replied as being important to their locations. It is important to provide assistance to developers and manufacturers, in order to encourage the incorporation of manufacturing as a part of the growth and creation of these districts.

Toronto is home to a thriving industry of creative manufacturers creating domestically and internationally recognized products.

The City of Toronto has an opportunity to promote its growing small-scale manufacturers through the creation of Creative Economic Districts. These Creative Economic Districts will help promote the relevance of these manufacturers and their networks, and encourage small-scale manufacturing in mixed-use areas. By promoting manufacturing and its benefits, a change in attitudes towards mixed use neighbourhoods may occur, fostering an environment that eases the challenges faced by small manufacturers starting up.

Toronto’s Fashion District provides great insight into the benefits of these creative economic districts. The 35-block fashion district in the King-Spadina neighbourhood hosts several different aspects of the fashion industry, from marketing to manufacturing (City of Toronto, 2016). Its prime location provides access to skilled labour, industry innovators, and Canada’s largest consumer market. In addition, it is steps away from David Pecaut Square, home to Toronto’s World MasterCard Fashion Week, the second largest fashion week in North America bringing worldwide recognition to Toronto’s fashion industry (City of Toronto, 2016).

Creative Economic Districts, like the Toronto Fashion District, provide small-scale manufactures with access to clientele, ancillary economic needs such as administration or marketing, and industry support, all within a convenient locale. In addition, it has been proven that clusters of like-minded industry sectors, like Creative Economic Districts, facilitate close business social ties, leading

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to information sharing and innovation (Curran, 2010). Many survey respondents indicated the advantages of being located in an mixed-use area that hosts different ancillary components of the sector in which it operates. However, some respondents who indicated the benefits of locating within these areas were feeling pressures to relocate due to rising land costs. Furthermore, the inability to secure affordable longer term leases elsewhere in Toronto has made relocating to Hamilton, or elsewhere outside the City limits appealing, to avoid multiple relocations and the resulting lost profits.

As the city continues to grow, land use policies pose challenges to small-scale manufacturers who wish to be a part of these Creative Economic Districts. Locating appropriate manufacturing space within these districts can be difficult when competing against increasing commercial and residential development pressures. The City of Toronto needs to encourage developers, through CRE zoning designations to provide mixed-use spaces within these areas. In addition, as detailed in recommendation 2, incubator-style multi-tenant industrial manufacturing facilities provided through non-profits who work within these creative economies can use assistance from government and City grants to provide affordable spaces for manufacturers to use in these areas. Providing small-scale manufacturers with the opportunity to locate themselves within these districts through subsidies encourages innovation and growth through healthy economic cooperation.

The creation and promotion of Creative Economic Districts can be beneficial to small-scale manufacturers in two ways: First, by creating a profile and unified identity for a specific sector of manufacturing, public reception of the manufacturers may be improved and a positive connotation given to their location in the area. Second, in some parts of the city, the use of a Creative Economic Districts can work in tandem with the application of Community Improvement Plans. Under Section 28 of the Planning Act (1990), municipalities may designate CIPs in areas due to “age, dilapidation, overcrowding, faulty arrangement, unsuitability of buildings or for any other environmental, social or community economic development reason.” This permits the city to apply additional grants, loan and property assistance programs which could be used to directly assist developers to create space for manufacturing, parts of which could be subsidized. Given that the CIP designation may only be applied in certain areas such as those with “barriers to the improvement or redevelopment of vacant or underutilized land or buildings”, it is likely that this recommendation could be applied in many of the same areas which fall under the Regeneration Area designation.

IMPLEMENTATION Mixed Use Areas in the Official Plan are currently made up of residential, commercial, and institutional uses. We recommend the addition of the following small-scale manufacturing uses and policy to promote Creative Economic Districts to the Official Plan under the Mixed Use land designation.

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Creative Economic Districts are areas of the city with a cluster of small-scale manufacturers and ancillary institutional or commercial uses, such as Toronto’s historic Fashion District. Uses that support the growth and sustainability of these districts are encouraged.

With this policy statement in place, City Planning can more readily enter into agreements with developers through Community Improvement Projects. In addition, Toronto City Planning and Economic Development and Culture need to work together closely to ensure that these Creative Economic Districts are identified within policy and are promoted.

5.1.3 BUILDING COMMUNITY SUPPORT THROUGH CONSULTATION AND EDUCATION

· Use innovative public consultation methods to break down the negative connotations that surround the manufacturing sector. · Promote the benefits of small-scale manufacturing through a public campaign.

Providing enhanced public consultation strategies and promotion for areas where manufacturing will be a permitted use, can help facilitate community support in mixed-use areas. As detailed in the case study below, introducing neighbouring residents to the range of small-scale manufacturing that is permitted to exist in areas such as Regeneration Areas, Manufacturing Regeneration Areas and Creative Economic Districts, can alleviate concerns of land-use conflict and develop a sense of community pride and support.

Encouraging a growing urban manufacturing sector in mixed-use areas City of Toronto is not attractive politics for residents, and in reality it can pose some anxiety to manufacturers as well, as manufacturing has developed an association with nuisances and noise.

Most new urban manufacturing today is smaller, cleaner and more environmentally friendly than in the past. Ensuring residents understand this new face of manufacturing is important to gaining mutual respect of residents and manufacturers in order to coexist. Each circumstance is different and needs tailored public consultation in order to succeed. Overall, it is important that the City of Toronto promote the new face of manufacturing, and small-scale manufacturers, in the city.

With the implementation of Regeneration Areas and more importantly, the new Manufacturing Regeneration Areas, it is important for the community to understand exactly what is to be permitted under the Manufacturing Regeneration Areas. Because

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the Manufacturing Regeneration Areas are designed specifically for manufacturing uses that can coexist in a mixed use area, it is encouraged that the portion of the public consultation process required for Regeneration Area studies is dedicated to ensuring that community members fully understand the types of manufacturing permitted in the area, and that their public consultation method has been used in other areas and has proven to work, as described in the case study.

In addition, it is recommended that both public and private organizations create an awareness campaign on the benefits of small-scale manufacturing. Business associations, as well as advocacy groups like Toronto Made could benefit from the promotion of manufacturing.

Both the Toronto City Planning and Economic Development and Culture divisions hold a strategic position to create an ongoing multi-media campaign to engage citizens and educate them on the benefits and positive impacts of urban manufacturing. Subway advertisements, television commercials, and Internet advertisements will educate, while town hall meetings and small local manufacturer fairs showcasing local goods can engage Torontonians and show the tangible benefits of urban manufacturing.

CREATING COMMUNITY SUPPORT FOR MIXED-USE MANUFACTURING AREAS When Boston was undergoing a manufacturing renaissance as a result of new policy and zoning efforts to retain manufacturing jobs in the city, it met a roadblock when rezoning a neighbourhood known as Hyde Park. The City of Boston wanted to ensure that the manufacturers of Hyde Park were able to remain in the area while the City made new plans for redevelopment and growth. During the public consultation period, City staff heard from a number of concerned residents who would not support the continued use of industrial lands in the neighbourhood. Residents in the area were not knowledgeable about the current type of manufacturing that existed in these areas and their worries stemmed around an outdated idea of what manufacturing manifested itself. To mitigate this problem, City staff sat down with residents and manufacturers to go over the rezoning plans that allowed only specific types of light manufacturing uses. Staff went line-by-line through the zoning bylaw to ensure that everyone understand what types of employment would be permitted in the area. As a result, concerned residents were able to meet with the local manufacturers and understand what it was they did and produced, such as small batch foods and snacks, bicycles and bicycle parts, small-scale metal works etc. This was the beginning step to a respectful coexistence between the urban manufacturers in the neighbourhood and the residents, who often enjoy the goods produced within their neighbourhood. This comprehensive approach would be a first step in building a mutual respect between small-scale urban manufacturers and the communities in which they reside, overall helping to promote a local economy and a strong urban manufacturing sector.

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224 Wallace Avenue A. Guidoccio

5.2 RECOMMENDATION 2 – CREATING SHARED SPACES FOR SMALL-SCALE MANUFACTURERS TO THRIVE

· Promote the creation of mixed-use developments that provide creative and adaptive floor plans for small-scale manufacturers. · Encourage nonprofits to develop shared manufacturing spaces through city-wide incentives and tax breaks.

We recommend that an incubator-style multi-tenant industrial manufacturing facility be sought after and created through public, private, and nonprofit organizations such as Toronto Made, providing affordable and secure operating spaces for smallscale manufacturers. Benefits of such spaces include provision of services, tools, education, and network opportunities.

The justification for this recommendation comes through the analysis of Toronto’s industrial real estate market conditions, the economic benefits of agglomeration economies, and analysis of the compiled research data.

Toronto’s industrial real estate market conditions are showing that industrial landowners are finding greater incentives to liquidate their properties to developers who often attempt to convert the land to non-industrial uses. This liquidation trend is the result of increasing industrial sales prices. Additionally, industrial landowners are increasing their lease rates which is creating affordable spaces for small-scale manufacturers to operate in. This shared use facility would attempt to address the real estate challenges small-scale manufacturers are burdened with. By securing space that can be leased below the market rent value, new businesses are presented with more attractive options for locating within the city centre which will promote small-scale urban manufacturing.

Shared manufacturing space also allow small-scale manufacturers to capitalize on agglomeration economies, a term used to focus on the benefits that arise when businesses locate within close proximity to each other. Some of the benefits of an agglomeration economy include shared ideas and resources between businesses, as well as the ability to network and make connections more efficiently. By sharing ideas, small-scale manufacturers are able to create more unique products for consumers, and with resource sharing they are able to produce these products at a more efficient rate. Agglomeration economies also allow smallscale manufacturers to create a network of connections which can enable future growth and expansion. Networking increases the number of opportunities for small-scale manufacturers that will allow them to create a reputation for themselves.

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IMPLEMENTATION The Non-Profit Strategy The implementation of a shared space facility solely dedicated for non-food and beverage related small-scale manufacturing is currently unprecedented within the city. A variety of soft and hard techniques should be utilized if this recommendation moves forward to implementation. These soft techniques pertain to the facilities operating partnerships while the hard techniques refer to the financial tools that can be used for development. Both implementation approaches are recommended in order to achieve operating and economic efficiency.

The Sustainable Competitive Advantage (2012) report puts forth the idea that pure property-led market development cannot address all the market needs for a local economy by stating the “highest and best use for a single parcel of land does not necessarily translate into the best use at the neighbourhood or city level�. As previously demonstrated in this report, current land value differentials in Toronto reflect a market that favours more profitable forms of development such as residential and commercial, over industrial. If private sector development is unable to fulfill the role of creating new industrial space, there is impetus for other models to intervene in the market to support a diverse economy inclusive of manufacturing. Currently, non-profit development organizations across North America are fulfilling this role by creating affordable and secure spaces for uses that are important to cities but do not necessarily meet the economic bottom lines required by private developers. Some examples include Urbanspace Property Group and Artscape in Toronto who offer below market rate studio and office space for creative sector tenants. In Brooklyn, Greenpoint Manufacturing and Design Centre (GMDC) is an organization that has been creating affordable manufacturing spaces in urban settings for decades.

The following case studies demonstrate how two non-profit development organizations have successfully managed and created important space for their communities. The identified strengths will be applied to help establish a working framework for how nonprofits would approach creating a similar manufacturing facility.

By studying these examples, reviewing literature and speaking with sources from the City of Toronto and the non-profit place-making sector, this report identifies several key strengths that situate non-profit development organizations as important stakeholders in the industrial development process.

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Mission-Driven over Market Driven Approaches Non-profit organizations have the capacity to invest in projects that transcend purely profit-driven returns by focusing on a triple bottom line inclusive of wider social, economic and environmental goals. These goals include creating sustainable, affordable and stable workspaces to create long-term benefits for communities. While lack of social and environmental motivation is not indicative of all private-sector developments, it’s an important distinction to be made when determining what drives particular development outcomes between sectors (UMA, 2014). Three factors determine why mission-driven models have an advantage in creating and operating a new multi-tenanted industrial facility.

1. There is a greater willingness to accept a lower rate of return by investing in less profitable land uses if non-financial out comes are also included in the project (Brookings Institute).

2. Rather than selling the project after completion to receive immediate financial returns, mission-driven organizations have an interest in providing support that continues into the operating stages. This community-based model can be beneficial for both the tenants who can rely on stable, well-managed and affordable space through external market threats, while the nonprofit developer can re-invest their earnings into future projects (UMA, 2014).

3. Small and mid-sized urban manufacturers tend to rent, rather than own their spaces (ibid.) which was true for 84% of our respondents. Unlike residential tenants, commercial tenants do not have any guidelines protecting rental increases between leases. If a key principle from a mission-driven model to provide affordable rents to tenants, this insecurity between substantial increases between lease renewals could provide stability and security. Non-profits could seek to manage these rents, as part of administrative capacities in shared manufacturing space.

Access to government and philanthropic subsidies and grants for capital investments, remediation, acquisition and heritage renewal Operating as a non-profit organization presents a number of advantages unavailable to private landowners and developers looking to invest in less profitable developments like industrial space. Non-profits are able to leverage municipal planning tools, like Section 37, to offset costly development that are otherwise unavailable to the private sector.

Cross-Subsidization throughout the organization Established non-profits can use cross-subsidies within the organization to provide different scales of fees to tenants and clients based on the capacity of their resources. For example, Artscape’s diverse real estate portfolio allows them to charge market rates to rent out their facilities for private events which in turn help operate reduced rents for emerging artists.

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Public Private Partnerships (PPP) Successful non-profits will understand the importance of building networks with a variety of public, private and community stakeholders to achieve a desired outcome that benefits the community. An opportunity exists to work with private developers who are increasingly required to provide community benefits to the adjacent community through density bonusing and parkland dedication provisions in the official plan. Community benefits can also arise through the Ontario Municipal Board mediation process.

Nonprofits can take on the role of intermediary to help bring a mission-driven approach to both the development and operating stages of the project instead of private or public sector. This approach is currently being demonstrated for the Artscape Weston Community Hub project set to open in 2018. This PPP saw all three levels of government, Rockport Development Company and Artscape work together to acquire and develop an underutilized parking facility. The outcome of the development is affordable housing units, outdoor community space and programming space for non-profit organizations and creative industries.

Creating and maintaining strong relationships with surrounding communities In addition to providing an important workspace, nonprofits have the capacity for benefits to spill over into the surrounding neighbourhood both economically and socially. In addition, Artscape offers important and complementary community based services alongside commercial art space within their facilities. Some of these include hosting community markets where artists can sell their products as well as providing children’s art programming. By allowing a non-profit to provide these community services, the City will offer additional significant capital loans and grants to offset the need to directly operate and fund them themselves.

Retrofitting Vacant Industrial Buildings As previously mentioned, the City of Toronto as of 2012 had 1,740 acres of vacant land in designated Employment Areas. Should these lands also contain vacant industrial buildings then this figure provides a significant opportunity for a potential retrofitting to incorporate a shared space facility. Additionally, these buildings have extensively large floor plates which can accommodate a significant amount of small-scale manufacturing tenants after retrofitting. While this option may present financial challenges for developers, there are three financing tools that can make this type of development more feasible and attractive; Section 37 Funds, Brownfield Tax Breaks and Grants, and Heritage Property Tax Relief.

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225 Sterling Rd A. Guidoccio Heidi Earnshaw’s Studio A. Guidoccio

Section 37 Funds Under Section 37 of the Planning Act a municipality may enter into an agreement with developers for contribution funds in exchange for additional height and density on developments within the vicinity. These funds have to be used towards providing community improvements in the surrounding area. Section 5.1.1 of the City of Toronto Official Plan identifies that Section 37 funds from increased density bonuses include; non-profit arts, cultural, community or institutional facilities. Since this facility will be a non-profit facility, Section 37 funds could potentially be used into actually retrofitting the facility itself. This will surely attract non-profit developers as they will not have to spend as much money on hard construction costs where they would elsewhere.

Brownfield Tax Breaks and Grants With the assumption that many of these vacant industrial buildings are situated on contaminated sites, the remediation costs become immensely expensive, making retrofitting and redevelopment less feasible. The Brownfield Financial Tax Incentive (BFTIP), Brownfield Remediation Tax Assistance (BRTA) and Imagination, Manufacturing, Innovation, Technology Financial Incentive Program (IMIT) provide fiscal platforms that make retrofitting industrial buildings more feasible and therefore more attractive to developers. The BFTIP allows for the City of Toronto to provide property tax assistance in the form of a Community Improvement Plan. This plan will provide tax assistance to landowners who are taking measures of remediating their land for future productivity.

In addition, the BRTA allows for the City of Toronto to alleviate all or a portion of the tax increase that a property would incur after the remediation is complete. Lastly, the IMIT program can provide a grant of up to 60% of the increase in the municipal taxes for manufacturing developments over a 10-year period. However if the building is located in an Employment Area this grant can be increased to 70%.

Heritage Property Tax Relief Since some of these vacant industrial properties are heritage listed, developers can further benefit with the Heritage Property Tax Relief. This provincial tax relief is administered through Community Improvement Plans as it is designed to encourage rehabilitation of both underutilized and historical buildings. This relief comes in the form of a tax break between 10% to 40% for the owner of the property. In addition, the Toronto Heritage Preservation Services offers a Heritage Grant Program which provides grants for up to 50% of the costs associated with conserving and preserving heritage properties.

LIMITATIONS AND CHALLENGES Upon moving forward, there needs to be an understanding of the limitations and challenges this type of non-profit, shared space facility poses to the operators. These include;

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Expenses in Operation Distinct set of costs associated with providing space for manufacturing tenants rather than office tenants in traditional, more knowledge based sectors. These costs include high quality machinery, maintenance and retrofitting spaces for individual tenant needs.

Insurance If membership models are used to share equipment, there are liability risks for operating heavy machinery. Providing mandatory training courses could help reduce this liability.

Level of Inclusiveness Not all sub-sectors will be able to operate in mixed facilities. Conflict could arise between manufacturers being within close proximity to heavier activities such as wood or metal working.There would have to be a clear distinction of what activities are compatible for the envisaged space Limitations of Business Expansion When asked what one of the greatest challenges a business faced with their current location, a quarter of respondents agreed that they had outgrown their space. Given that investment for retrofitting a manufacturing space can be quite substantial when compared to other more knowledge-based industries, ensuring that business can continue to grow is important to the model.

This problem could be approached by having a wide variety of unit sizes, flexible floor models or creating partnerships between other facilities to assist tenants in their search for a larger space.

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CASE STUDY – ARTSCAPE MODEL Artscape is a non-profit development organization that helps facilitate and develop affordable spaces for artists and cultural organizations. Over the past 25 years, they have helped create below market rate art space spanning ten different facilities that include community central hubs, multi-purpose creative spaces and artist live/work projects across the City. These spaces have contributed to Toronto’s growing cultural economy not only through the provision of workspace for artists, but also by establishing an anchored network for the arts community and the renewal of under-utilized properties.

They approach development through extensive collaboration by involving artists, designers, planners, community activists, environmentalists, government officials, as well as different types of developers to create projects that will benefit the city and all parties included. Being a non-profit organization, Artscape has delivered many benefits towards the economy and community. These benefits include:

· $3.6 million in savings passed on to Artscape artists and organizations on annual commercial and

residential occupancy costs

· Rental rates for artists and non-profit organizations 58% lower than gross average rates for commercial

spaces in downtown and midtown

· Over $1 million in annual subsidies to community groups and non-profit organizations to access

Artscape event venue spaces (Artscape, 2015) In addition, Artscape offers important and complementary community based services alongside commercial art space within their facilities. Some of these include hosting community markets where artists can sell their products as well as providing children’s art programming. By allowing a non-profit to provide these community services, the City will offer additional significant capital loans and grants to offset the need to directly operate and fund them themselves. By adopting this integrated community model, an opportunity exists for similar organizations to facilitate small local manufacturers to operate out of similar multi-tenant and multi-use facilities.

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CASE STUDY - GREENPOINT MANUFACTURING AND DESIGN CENTER (GMDC) The GMDC uses tools in urban planning, development, and real estate to create affordable spaces for manufacturers in urban settings. Formally incorporated in 1992, GMDC has restored seven manufacturing buildings in Brooklyn, New York, occupied by small manufacturers, artisans, and artists. The organization acts as an advocate for urban manufacturing through extensive collaborations between stakeholders and influencing policy around urban manufacturing.

GMDC is a non-profit organization, controlled by a board of directors, made up of building tenants and local experts. Relying on a public-private partnership model, as well as New York City Economic Development Corporation to help provide funding, GMDC has created space for over 100 small businesses that employ over 500 people, at a wage substantially higher than the average service job in New York. Their most recent facility, 1102 Atlantic Avenue, was given $4.6 million in support to fund the estimated $15 million in costs.

GMDC provides affordable, accessible space to small manufacturers, and offers value added services, such as English as a second language classes, to help local small manufacturers succeed and develop high quality products. Through long term leases from the city, rent is fixed at a percentage of the net income of the building, rising slowly to avoid negatively impacting the growth of the companies. This financial support system has allowed GMDC to focus on creating attractive, affordable spaces, with its tenants benefiting from support networks, a voice in operations of the space, and increased salaries.

Currently, GMDC has a zero vacancy rate in their buildings. Although this reflects the organization’s success in attracting tenants to use their facilities, it also demonstrates the high demand for industrial uses in New York City’s real estate market (Petro & Murphy, 2014) Suitable properties are increasingly scarce due to rapid conversion of manufacturing zoning and encroachment of commercial and residential. This case creates a stronger impetus for protection of employment lands in the City of Toronto

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5.3 RECOMMENDATION 3 – ENSURING INDUSTRY SUPPORT FOR SMALL-SCALE MANUFACTURERS 5.3.1. BUILDING A “MADE IN TORONTO” BRAND

· A collaborative effort by the City of Toronto and Toronto Made to develop toolkits that can be used to guide policy that promotes a locally-made brand platform.

A critical element of small-scale manufacturing is the need for supporting networks and intermediate associations that provide assistance to manufacturers and small businesses. These associations provide help with financial and business advice, allowing small-scale manufacturers to access a wider network of consumers and business partners. Through a collaborative effort between the City of Toronto and Toronto Made, a “Made in Toronto” brand can be initiated through comprehensive toolkits, providing small-scale manufacturers with the recognition and support that they need to thrive.

The development of toolkits will help direct policy and promote a “Made in Toronto” identity that will enhance the protection, promotion and growth of the small-scale urban manufacturing industry in Toronto. These toolkits can help cities and their local manufacturing industries develop and leverage local identity using branding and communication strategies, and potential major retail distribution partnerships can grow sales and develop export markets (Urban Manufacturing Alliance, 2013). Through the promotion of “Made in Toronto” goods, manufacturers are able to develop a geographic identity based on their local neighbourhood and the city as a whole. This geographic identity creates a cultural connection with consumers and fosters pride in the locally made goods (SFMade, 2013). In addition, this unique geographic identity will help small-scale manufacturers in Toronto differentiate their products in local markets from their international competitors (SFMade, 2013).

The toolkits will provide a step-by-step guide to build Toronto’s locally-made platform based on successful case studies such as SFMade (Urban Manufacturing Alliance, 2013). These toolkits could contain information and resources to help new businesses establish themselves, regarding topics such as land use, zoning, and real estate issues. Branding tools and workforce development skills can also help small manufacturers manage the challeneges of establishing an identity in markets. In conjunction with these toolkits, Toronto Made can work with the City of Toronto, providing them media kits, press releases on new research reports, events, and policy with regard to the promotion of small-scale manufacturing.

5.3.2 ENHANCING SERVICES TO ASSIST SMALL-SCALE MANUFACTURERS

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· Encourage Toronto Made to adopt a similar approach to assisting small-scale urban manufacturers, like that of the City

of Boston’s Back Streets Office, offering real estate advice, land use and zoning assistance and conflict resolution.

Finding appropriate spaces, navigating land use policies and zoning bylaws, and mitigating conflicts that may arise from surrounding land uses is a daunting and difficult task for small-scale manufacturers to deal with alone. Ensuring that Toronto Made has the services in place to support small-scale manufacturers who wish to rent or purchase their first space, relocate, or remain in their current location is important. Without effective support from , small-scale manufacturers may not survive in urban mixed-use areas.

While there are systems in place to help Toronto based business; a quarter of survey respondents lamented the lack of support to help expand and grow their businesses, this in particular included finding appropriate space and mitigating land use conflicts. This is an issue that has been experienced in cities throughout North America with the goal of maintaining small-scale urban manufacturing. The City of Boston Back Streets Office, a city-wide initiative under the Boston Redevelopment Agency (BRA), has successfully provided a range of comprehensive industrial planning services and strategic advice to help address this gap. Back Streets Boston was launched in 2001 after the City of Boston noticed an exodus of small and medium urban manufacturers exiting the city as a result of complicated municipal processes, barriers to land use and a lack of assistance and resources to grow within urban Boston (BRA, 2009). In addition to the industrial zoning conversion criteria, Back Streets Boston offers continued support and assistance in four areas: real estate, workforce, business assistance and resources and partnerships (Boston Redevelopment Agency, 2009).

Toronto Made is encouraged to collaborate with the City of Toronto as a support system, to develop a similar program that provides the following assistance:

· Advice on the current real estate market for manufacturing spaces and where they are located, · Assistance navigating and access the local regulatory environment, particularly zoning bylaws. · Connections between small-scale manufacturers with skills training programs and employment offices to help small-scale manufacturers access skilled labour, and · Provision of conflict resolution assistance and toolkits to help mitigate land use conflicts.

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5.3.3. ESTABLISHING TORONTO MADE AS THE PRIMARY SUPPORTER FOR SMALL-SCALE URBAN MANUFACTURING IN TORONTO

· Toronto Made must take on a more influential role to promote the needs and concerns of their small-scale urban manufacturing network to all levels of government.

Toronto Made has a unique opportunity to become the lead supporter for small-scale urban manufacturers in the City of Toronto. Their current membership spans a wide selection of industries and their ability to-date to promote awareness around small-scale urban manufacturing makes them a credible source.Toronto Made is encouraged to take on a larger role in the policy promotion and branding promotion of small-scale urban manufacturing in Toronto, and advocate on their behalf to all levels of government.

Since its formation, Toronto Made has successfully brought together small-scale urban manufacturers across different sectors.

The organization’s staff have also been successful at promoting and raising awareness of small-scale manufacturing in Toronto through media opportunities, events, branding, and facility tours. During an interview, one survey respondent made note that they did not belong to larger manufacturing associations, such as CME, because they felt they did not represent true small-scale manufacturers. However, the respondent did recently join Toronto Made, highlighting it as an important support network for small manufacturers.

Toronto Made is encouraged to remain active and increase its efforts to promote and grow its network. It is recommended that Toronto Made build its presence through increased public and private stakeholder relations. This will help them undertake research and efficiently advocate on behalf of their network.

In addition, it is recommended that Toronto Made continue to use cultural events to raise awareness of small-scale manufacturing in Toronto. Growing existing events, such as the Toronto Made Summer Meetups, will help promote an identity, and looking to other cities can provide insights on how to do so . SF Made, a similar organization to Toronto Made situated in San Francisco is highly engaged in the local community, hosting public events including holiday gift fairs, the SFMade week, factory tours, the SFMade Certified Local Manufacturer Program and the “Ramp it Up” event (SFMade, 2013). “Ramp it Up” raises awareness about local manufacturers, and includes local craft breweries, clusters of local wineries, distilleries, coffee roasters, food manufacturers, and one on one business consultations (Urban Manufacturing Alliance, 2013). Toronto Made is encouraged to further organize similar programs and events to capitalize on the growing cultural market that surrounds this local made movement.

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1 Brothers Dressler Studio A. Guidoccio

6 NEXT STEPS The recommendations presented provide a starting point for action by Toronto Made and the City of Toronto towards improving and encouraging small-scale manufacturing. Toronto Made should pursue the partnerships and actions described in Recommendation 3, in order to be a strong voice for small manufacturers.

Furthermore, Toronto Made should use their social network to promote this report and start a public conversation about the issues and actions raised. While our group attempted to work with as many small manufacturers as possible to inform this report, further feedback and response to our work would ensure that the recommendations best represent small manufacturers’ needs.

A number of the recommendations require direct action from the City of Toronto to make policy changes. Toronto Made should present this report to the Economic Development Division and the Strategic Initiatives, Policy & Analysis department which includes the Zoning Bylaw team and the Official Plan team. These departments could review the recommendations and take the appropriate steps to review, research, and recommend aspects of the report which are feasible.

In addition, Toronto Made should encourage and work with Economic Development to create an official definition for small manufacturing. This is a necessary starting point if the City is to do any further work specifically supporting small manufacturers.

To expand its own capacity, Toronto Made should seek out non-profit grants from all levels of government. Increased funding could allow Toronto Made to dedicate more time and resources to these recommendations.

Overall, further discussion between Toronto Made, the City of Toronto, small manufacturers, and members of the public is necessary to build support and initiate change towards protecting and encouraging small manufacturers in Toronto.

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71 Left Field Brewery K. Mikelsteins

Alissa Coe’s Studio A. Guidoccio Alissa Coe’s Studio A. Guidoccio

7 APPENDIX Survey- Small Manufacturing in Toronto Business Name

No

Address

2.0 Company Information What year was your business established?

Business Description Is this a home based business Do you rent or own your facility?

Rent Own Other (please specify) If you rent your workspace are you aware of the overage concept?

Yes No If yes do you use overage?

Yes No What is your business’ estimated square footage? # of employees (including yourself) On site Off site Part time Full time Contract/Seasonal/Temporary Unpaid Volunteer If you are the sole employee, is this your only source of employment?

Yes 73

Did you establish your business in Toronto?

Yes No How many years have you been at your current location?

Have you been located anywhere previously?

Where do you sell your products?

On site Online Local shops Distribution Companies Craft fairs/other events Other (please specify) Where is your target market located?

Toronto The GTHA Ontario Canada USA Other (please specify) Where do you source your raw materials?

Toronto The GTHA Ontario Canada USA

Other (please specify) Do you collaborate/network with any other manufacturers/organizations in Toronto?

Yes (please specify) No What do you like about your current location (circle those that apply)?

Affordability of space Neighbourhood atmosphere Proximity to other manufacturers Proximity to customers Proximity to transit networks What challenges do you face at your current location?

Space is unaffordable Owner is selling building Building is being redeveloped or demolished Space is not equipped with necessary components to operate production Business has outgrown the space Conflict with surrounding residents Conflict with surrounding businesses Other (please specify) 3.0 Further Questions Please briefly describe the greatest challenge you face as a small manufacturing business in Toronto.

As a small Manufacturer, which of the following have been a challenge?

Securing workspace distribution exposure/advertising High labour costs Finding skilled labour

Other (please specify) None of the above What potential benefits do you see from your manufacturing sector (Food & Beverage, Apparel, Interiors, Printing, Metals, etc.) in Toronto?

Are you aware of Toronto Made?

Yes No Are you a member of Toronto Made?

Yes No Are you aware of any small business incentives of resources provided by the City to help your business?

Yes No Do you use any small business incentives of resources provided by the City to help your business?

Yes (please specify) No What kind of small business incentives or resources would you like to see offered by the City of Toronto?

Zoning literature & clarity Economic incentives Incubators/accelerators Other (please specify) If there was an incubator space for you to operate out of (for a small fee) would you utilize it?

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