By: Mat Steppan, Senior Strategy Advisor
In November, the Rural Municipalities Association of Alberta (RMA) held their annual fall convention in Edmonton. RMA events are a fantastic way to connect with municipal leaders and other companies interested in investing or doing business in rural communities. As one of my mentors once told me “The real convention is in the hallways,” so I use this event to connect clients with municipal leaders. RMA is also an opportunity to ask questions of those same municipal leaders and then listen closely to the challenges and barriers to economic growth they face.
Apologies to urban centres, but rural regions are the pillars of Alberta’s economy, including agriculture, oil, natural gas, petrochemicals, pulp and paper products and mining. Most of Alberta’s roads and rail also move through rural communities which makes those areas vital for safe and reliable supply chains and economic corridors. It is assumed, and perhaps even taken for granted, the significant projects that will drive economic growth for Alberta will be in rural communities. A new agrifood facility will not be constructed in the Terwilliger neighborhood of Edmonton, nor will a new oil rig be approved for the Marda Loop area in Calgary.
So, I thought it would be helpful to answer some of the key questions companies may have about working with rural municipalities.
Q: If opportunity knocks, will the municipality be able to answer?
A: Most rural leaders will tell you they are open for business. Alberta has competitive tax rates and tax incentives to attract new investment. However, rural municipalities also grapple with financial barriers, including unpaid taxes, restrictions on linear assessment, a freeze on taxes on new drilling, and cost escalations on road construction. To make things even more challenging, municipal governments absorb downloading from provincial and federal regulations and standards. When someone says ”there’s too much red tape with municipalities”, they should also acknowledge most of that “red tape” comes from other levels of government.
I remember meeting with a developer that was frustrated with poor road access and delayed water permits on his land purchase. The developer’s plans simply didn’t match up with the planning done by the municipality. The developer would have known the development plan for the area had they done their research. And coming in after the land purchase to complain to the province or the municipality about red tape is not conducive to building a positive and productive relationship with local leaders.
Q: Has the municipality maximized their budget flexibility?
A: Technically, early fall is the beginning of the budget season for municipalities, but for some regions, the budget process never ends. One CAO explained to me that their council’s direction is for the budget to be a buffer for potential investment. Major developments need a road, and the municipality can borrow or finance construction in a timely manner and communicate that timeline to the company investing.
Q: Are provincial grants used to offset the cost rather than fully fund a capital project?
A: Most municipalities try to use grants to offset costs. I heard a story of a rural municipality that was denied provincial funding for broadband, while another municipality is investing in broadband on their own. I also listened to a municipal councilor who has a potential major project in the hundreds of millions announced for their area. The project will need a water line with a price tag of $18 million, which is too rich for the municipality to absorb and they will need capital funding from the province. There will be opportunities to access provincial funds, but that will likely take many months to sort out, and project developers need to take that into account.
Q: Do municipalities understand what investors want?
A: Most municipal leaders understand that stability and predictability are vital for a final investment decision. As one Reeve asked me: “Would you go to a store that had the most expensive items, the worst customer service and inconvenient hours?” They understand companies are looking for competitive business taxes, accessible staff, and predictable approval timelines. They know companies have the ability to watch council meetings, review meeting minutes and scan budget documents, and will want to know how the council approaches their budget process and economic development. And, of course, they realize companies want to know if councilors have good relationships with each other, and if they get along with their neighboring municipal leaders.
Municipal leaders, for their part, look for good corporate partners who will support the community, pay their taxes, and understand that some of the regulatory hurdles are actually directives from other levels of government.
Companies look to municipalities for predictability and stability, but the reality is some municipalities are more prepared for major investment than others. Early planning, research and relationship-building will help sort out which area makes the most sense for investment.
Born and raised in Fort McMurray, Mat Steppan has more than 20 years of experience in government, post-secondary and the non-profit sector. Over his career, Mat has established a successful record of building positive relationships with elected representatives, government officials, and their staff on both sides of the government relations table and across the political spectrum.
- Municipal and Provincial Governments
- Informing Provincial Policy & Budget