oro-medonte medical innovation park (ommip)

ORO-MEDONTE MEDICAL INNOVATION PARK (OMMIP)Economic Impact Analysis – Preliminary Results

May 8, 2020

Willian Osler Health Centre April, 2020Image: Evan Mitsui/CBC

Information Requests:

Peter Thoma, [email protected]

416-351-8585 x 226 (1-800-505-8755)

with additional information provided by:

2Oro-Medonte Medical Innovation Park

Development Concept ……………………….…………………………..……… 3

Approach ……………………….………………………………………………………. 4

On-site Employment …….……………………….………………………………. 5

Economic Impact Model Inputs ……………………….…………………….. 6

Economic Impacts (Outputs) ……….………………………………..……..… 7

Appendix: Economic Impact Assumptions ………….………………….. 9

Appendix: Economic Impact Approach ……………….………………….. 12

Appendix: Detailed Economic Impact Summary Tables …………… 19

Appendix: North American Industry Classification System (NAICS) 22

Table of Contents


OMMIP Development Concept

SOURCE: Oakleigh Developments. For illustration only. Subject to change.


Approach

Estimating the economic impacts of the OMMIP involves measuring the direct, indirect, and induced impacts of

initial investments or spending at several different spatial scales (regional, provincial and federal).

This analysis contained herein has involved two primary stages, described below.

Stage 1 – Data Acquisition & Development Analysis

The accuracy of the economic impact modeling is dependent upon the detail of expenditure data. Most

expenditures associated with the subject site will be made within Ontario and economic impact multipliers

have been calculated on a local and provincial basis.

Stage 2 – Estimation of Economic Impacts

The economic impact of the one-time capital investments and has been has been estimated using the a

custom Statistics Canada Input-Output Model for non-residential construction expenditures, as detailed in the

Appendix.

The economic impact of ongoing operational output by future businesses in OMMIP is based on an

urbanMetrics model which relies upon the same input-output multipliers developed and maintained by the

Statistics Canada.

These multipliers are predicated on the notion that transactional spending among and between firms and

individuals across different sectors of the economy yield varying, yet distinct and measurable effects with

respect to value creation and economic uplift, including job growth and tax revenue. This pattern of activity is

commonly referred to as the multiplier effect.

A detailed description of our economic impact approach can be found in the Appendix.


On-site Employment

Based on the development concept and the composition of new business entities interested in the OMMIP proposal,

upwards of 1,440 full-time employment positions would be supported on site.

Unlike a conventional industrial park, the nature of these operations are also expected to support well-paid jobs in

the design and manufacture of goods and services earmarked for healthcare and related industries.

As illustrated below, we estimate that approximately 42% of future employment in OMMIP will be aligned with

advanced research, design and engineering occupations within the Professional, Scientific and Technical Services

sector. OMMIP will also support jobs aligned with the advanced manufacturing sector (55%) and distribution (3%) of

healthcare goods to meet the needs of domestic and international markets.

±1,440 FTEs


Economic Impact Model Inputs

These investments relate specifically to all

labour, trade, material and equipment

expenditures made as part of the

construction of the OMMIP.

This represents the average recurring GDP

Output associated with business entities

operating at subject site over the long-

term. As such, the corresponding economic

impacts generated by these entities

represent the ongoing benefits to the

community and region that will recur on an

annual basis.

One-Time Capital Expenditures

$ 509.5 M$ 267.5 M

Annual Business Output


One-Time Capital Expenditure Impacts

The one-time capital expenditures associated with the construction of all OMMIP facilities and on-site infrastructure

is expected to result in value added GDP (i.e., GDP output net of the goods & services used in the process) of nearly

$274 million and 2,170 full-time equivalent employment positions.

Approximately 75% of the economic output and 82% of the jobs are expected to occur in Simcoe County, a large

portion of which will occur in Oro-Medonte.

SOURCE: urbanMetrics inc., based on the custom Statistics Canada Input-Output Model (2014) Rounded to the nearest $100,000 and 10 jobs. Represents 2020 dollars.


Annual Operational Impacts

The annual operational revenues associated with the businesses operating out of the OMMIP facilities are expected

to result in annual value added GDP in the order of $423 million/per year, supporting an estimated 3,850

full-time equivalent employment positions.

Approximately 77% of the economic output and 79% of the jobs are expected to occur in Simcoe County, a large

portion of which will occur in Oro-Medonte.

SOURCE: urbanMetrics inc., based on the urbanMetrics Model and Statistics Canada input-output multipliers (2014). Rounded to the nearest $100,000 and 10 jobs. Represents 2020 dollars.


Appendix: Economic Impact Assumptions


Assumptions

There are a number of basic underlying assumptions upon which the validity of the findings presented in

this report depend. If, for any reason, major structural changes occur within the economy, the

recommendations contained in this report should be reviewed in light of such changed conditions and

revised, if necessary. The following provides a brief summary of the key underlying assumptions for this

particular economic impact analysis.

• The healthcare manufacturing sector in Ontario will continue to be a core pillar of the provincial

economy and will remain a key driver of Canada’s policy agenda for innovation in the coming years.

Canada will have an ongoing need to create a supply chain for medical equipment within Canada in

order to improve it’s response to COVID and future pandemic and healthcare threats. As such, it is

expected that the healthcare manufacturing industry will continue to grow as the country and the

province continues to bolster this supply chain.

• The various statistical inputs relied upon in our analyses—based largely on Statistics Canada,

municipal information, CoStar Realty Information Inc. and other available real estate market data

sources—are considered sufficiently accurate for the purposes of this analysis. These statistical

sources have ultimately informed a number of the key underlying assumptions and inputs utilized in

our analysis, including employment densities, hard and soft building costs, property assessment

values, property tax rates and other municipal fees, employment compositions by industry and other

relevant factors.


Assumptions

• The overall real estate development program outlined herein is a preliminary and high-level concept only. It

is intended for reference and illustrative purposes, providing a general indication as to the possible extent of

an healthcare manufacturing focused development project on the subject site. It does not necessarily

represent the actual extent nor type of development that could ultimately be advanced by the owners of

the subject lands. As outlined in more detail herein, these concepts have been based on information

obtained directly from the OMMIP Principals.

• References to the Canadian dollar in this report, dealing with present and future periods, reflect its 2020

value. We recognize that fluctuation in the absolute value of the dollar will likely occur during the period

covered by this report. We assume, however, that the relationship between the various metrics identified

(e.g., construction costs, retail spending etc.) and the value of the dollar will remain more or less constant

during the period analyzed. As such, no adjustments for inflation have been included in our analysis.

• Similar to the above, given the preliminary and conceptual nature of the development scenario considered

in this study—as well as the level of statistical detail available at this early stage of the planning process—

our economic impact analyses do not necessarily take into account the time value of money, nor have we

applied a corresponding discount rate, as is typical in more traditional development pro forma financial

analyses. In the case of an economic impact analysis, such as those presented in this report, the resulting

financial benefits are a direct result of an initial “shock” expenditure or investment. If capital investments

are increased or reduced due to concept refinements the proportion of the impacts will adjust

commensurately as a result of the multiplier.


Appendix: Economic Impact Approach


Our Approach

The quantitative economic impacts of the OMMIP have been estimated using

Statistics Canada Input-Output multipliers, which simulate the flow of

expenditures through the economy. This methodology provides a reliable

measure of the following four economic key impacts:

• Gross Economic Impact

• Employment

• Labour Income

• Tax Revenues to the Three Levels of Government

The main steps in running an economic impact model are:

1) Compiling the input spending data.

2) Assembling the data to ensure all expenses are accounted for and

divided into categories to ensure that the individual economic sectors

are appropriately represented.

3) Calibrating the model to the local economy using employment data.

4) Running the finalized version of the model.


Methodology

Output(Jobs, Taxes, and Value Added)

Statistics Canada

Input-Output Multipliers

Local Output Adjustment(Location Quotient Assumptions)

INPUT-OUTPUT MODEL

Input(Economic Shock)

Economic ShockThe OMMIP capital expenditures and operating outputs are allocated to appropriate industry sectors using the 2007 North American Industry Classification System (NAICS).

National and Provincial Expenditure RelationshipsThe economic impacts of the initial investments and ongoing outputs are then measured at the national and provincial level through the use of the Statistics Canada Input-Output multipliers, which is based on the Canadian National Input-Output Accounts for 2014.

Spending, Tax and Employment GenerationThe Statistics Canada multipliers estimate the direct, indirect and induced impacts of spending across the Province and Canada as these one-time and ongoing expenditures filter through the economy.

Local Spending, Tax and Employment GenerationurbanMetrics applies Simcoe County industry adjustments to determine the share of local impacts relative to Ontario.

Economic Impacts Attributable to Economic Activity In:


Types of Impacts

The basic principle of the models is the concept that each dollar of expenditure on goods and/or services purchased

from a given industry sector circulates and re-circulates within the economy, thereby multiplying the effects of the

original expenditure. This process is commonly referred to as the multiplier effect. An estimated multiplier for the

one-time capital and ongoing expenditures for the proposed facilities on the subject site has three distinct

components:

Direct Impacts represent the initial capital investments made to construct the OMMIP. These expenditures include

the purchase of labour, equipment, other infrastructure and related services.

Indirect Impacts represent the subsequent purchases by suppliers required to produce the goods/services related to

the original and ongoing investments in the OMMIP.

Induced Impacts result when workers employed in the sectors, stimulated by direct and indirect expenditures, spend

portions of their incomes on consumer goods and services.


Types of Impacts

Direct, indirect and induced impacts are estimated in terms of the following measures:

Gross Output – a measure of total sales throughout the economy in question, as a result of an initial and ongoing

expenditures on goods and/or services produced by an industry1.

Value Added – the total unduplicated value of goods and services produced in the economic territory, determined by

subtracting the value of the goods and services used in generating the gross output.

Employment – total full-time, full-year jobs generated by direct, indirect and induced expenditures. For one-time capital and

ongoing expenditures, such as those being analyzed, the employment figures produced by the model represent years of full-

time employment. For example, one job identified by the model represents the equivalent of one person working full-time

for the duration of one year2.

Labour Income – total value of wages, salaries and benefits received by employees associated with direct, indirect and

induced expenditure.

Government Revenues – revenues accruing to federal, provincial and local jurisdictions as a result of direct, indirect and

induced expenditures. Revenue categories include personal and corporate income tax, sales taxes (e.g., PST and GST),

property taxes and other miscellaneous taxes, tariffs and fees.

Multipliers are expressed by the ratio of total impacts (direct, indirect and induced) to initial expenditures. For example, the

gross output multiplier is calculated by dividing total gross output by the initial expenditure on the bundle of goods and/or

services in question. The only exception is that of the employment multiplier, where total employment is divided by millions

of dollars of expenditure.

1 For example, with respect to a single construction project, an initial expenditure would be made to pay for the design firm and contractor. The design team would then hire staff, purchase equipment and

materials, such as computers, software, paper, etc. The construction company, would also hire labourers, pay for construction equipment and materials. The staff in turn would purchase goods and

services from their wages to support their everyday living. The sum of all of these expenditures would be the gross output. We do note that this involves some double counting (e.g., the initial expenditure,

in reality covered wages and salaries, equipment, etc. of the contractors it hired).

2 These employment figures represent the total full-time, full-year jobs generated by direct expenditures, as well as the indirect and induced impacts that are spread more broadly throughout the regional,

provincial and national economies. For one-time capital expenditures, such as those analyzed in this study, these employment figures represent total years of full-time employment (e.g., one job identified

represents the equivalent of one person working full-time for the duration of one year).


Types of Impacts

Localized Impacts

In Canada, Statistics Canada calculates input-output accounts at the national, provincial levels only. The economic

impacts for Simcoe County were calculated by applying “location quotients” to the economic impact results

generated for the Province of Ontario. Location quotients represent the share of employment in each industry sector

relative to the Province as a whole. This is the most common and accepted methodology for determining localized

impacts when industry and commodity data is not available.

The logic to using location quotients to estimate localized impacts is that the relative share of employment within a

given industry should be similar to the share of a purchase within that industry that could be sourced locally. There is

the potential for significant cross purchasing between municipalities, regardless of the employment composition,

however, this is less likely for Simcoe County due to the overall size of the County and its existing industries.


Types of Impacts

Other Considerations

Discount Rate –A discount rate is most typically applied to an income stream to represent the time-value of money,

whereby both expenditures and revenues made in the future are discounted to reflect their diminishing value as

time progresses.

In the case of an economic impact analysis, the economic impacts are a direct result of the initial expenditures. For

example, a multiplier will not change simply because the scale of an investment is reduced or increased (assuming

the proportion spent within each industry category remains the same). For this reason, the discount rate would have

to be applied to the capital expenditures, which would result in lower overall expenditures in the future. By showing

undiscounted expenditures, it is our opinion that we are more accurately reflecting the true costs associated with

OMMIP, and therefore, better reflecting the true economic impacts.

Labour Supply Impacts – It is our opinion that the significant investments and corresponding construction activities

at OMMIP will not, in and of itself, cause any meaningful labour imbalances in the local economies of Simcoe County.

Due to the depth and capacity of Simcoe County’s skilled labour force, we believe the County will be able to provide

and attract the skillsets needed to build the OMMIP, while maintaining sufficient labour to enable other construction

projects elsewhere in the County are able to move forward. As such, we have not adjusted our analysis to account

for these risks and have generally assumed that a reasonable amount of economic stability will prevail in these areas.


Appendix: Detailed Economic Impact Summary Tables

20Oro-Medonte Medical Innovation ParkSOURCE: urbanMetrics inc., based on custom runs of the Statistics Canada Interprovincial Input-Output model. Rounded to the nearest $1,000 and 10 jobs.

One-Time Capital Expenditures (Construction)

SIMCOE COUNTY ONTARIO CANADA

Initial Expenditure $ 267,532,000 $ 267,532,000 $ 267,532,000

Impact: Gross Output

Total $ 432,736,963 $ 503,586,454 $ 554,972,815 Multiplier 1.62 1.88 2.07

Impact: Value Added


Impact: Employment (Full-Time, Full-Year Employment)

Total 1,792 1,994 2,173 Multiplier 1.81 2.01 2.19

Impact: Labour Income

Total $ 152,506,991 $ 167,589,080 $ 181,489,443

Impact: Total Taxes

Total $ 80,329,079 $ 97,485,082 $ 104,897,679


Recurring Operating Output Impacts

SOURCE: urbanMetrics inc., based on custom runs of the Statistics Canada Interprovincial Input-Output model. Rounded to the nearest $1,000 and 10 jobs.

SIMCOE COUNTY ONTARIO CANADA

Annual Output $ 509,481,580 $ 509,481,580 $ 509,481,580

Impact: Gross Output

Total $ 798,777,845 $ 852,341,080 $ 1,021,167,413 Multiplier 1.67 1.67 2.00

Impact: Value Added


Impact: Employment (Full-Time, Full-Year Employment)

Total 3,049 3,164 3,846 Multiplier 2.12 2.20 2.67

Impact: Labour Income

Total $ 198,947,801 $ 205,363,622 $ 242,851,635

Impact: Taxes

Total $ 2,017,260 $ 26,272,059 $ 47,384,741


Appendix: North American Industry Classification System (NAICS)


NAICS

The following appendix provides a brief overview of the NAICS 2007 classification system and the two-digit level industry classifications,

as described by Statistics Canada.

The North American Industry Classification System (NAICS) is an industry classification system developed by the statistical agencies of

Canada, Mexico and the United States. Created against the background of the North American Free Trade Agreement, it is designed to

provide common definitions of the industrial structure of the three countries and a common statistical framework to facilitate the

analysis of the three economies. NAICS is based on supply-side or production-oriented principles, to ensure that industrial data,

classified to NAICS, are suitable for the analysis of production-related issues such as industrial performance.

11. Agriculture, Forestry, Fishing and Hunting

This sector comprises establishments primarily engaged in growing crops, raising animals, harvesting timber, harvesting fish and other

animals from their natural habitats and providing related support activities.

Establishments primarily engaged in agricultural research or that supply veterinary services are not included in this sector.

21. Mining, Quarrying, and Oil and Gas Extraction

This sector comprises establishments primarily engaged in extracting naturally occurring minerals. These can be solids, such as coal and

ores; liquids, such as crude petroleum; and gases, such as natural gas. The term "mining" is used in the broad sense to include quarrying,

well operations, milling (for example, crushing, screening, washing, or flotation) and other preparation customarily done at the mine

site, or as a part of mining activity. Establishments engaged in exploration for minerals, development of mineral properties and mining

operations are included in this sector. Establishments performing similar activities, on a contract or fee basis, are also included.


NAICS

22. Utilities

This sector comprises establishments primarily engaged in operating electric, gas and water utilities. These establishments generate,

transmit, control and distribute electric power; distribute natural gas; treat and distribute water; operate sewer systems and sewage

treatment facilities; and provide related services, generally through a permanent infrastructure of lines, pipes and treatment and

processing facilities.

23. Construction

This sector comprises establishments primarily engaged in constructing, repairing and renovating buildings and engineering works, and

in subdividing and developing land. These establishments may operate on their own account or under contract to other establishments

or property owners. They may produce complete projects or just parts of projects. Establishments often subcontract some or all of the

work involved in a project, or work together in joint ventures. Establishments may produce new construction, or undertake repairs and

renovations to existing structures.

31-33. Manufacturing

This sector comprises establishments primarily engaged in the physical or chemical transformation of materials or substances into new

products. These products may be finished, in the sense that they are ready to be used or consumed, or semi-finished, in the sense of

becoming a raw material for an establishment to use in further manufacturing. Related activities, such as the assembly of the

component parts of manufactured goods; the blending of materials; and the finishing of manufactured products by dyeing, heat-

treating, plating and similar operations are also treated as manufacturing activities. Manufacturing establishments are known by a

variety of trade designations, such as plants, factories or mills.


NAICS

41. Wholesale Trade

This sector comprises establishments primarily engaged in wholesaling merchandise and providing related logistics, marketing and

support services. The wholesaling process is generally an intermediate step in the distribution of merchandise; many wholesalers are

therefore organized to sell merchandise in large quantities to retailers, and business and institutional clients. However, some

wholesalers, in particular those that supply non-consumer capital goods, sell merchandise in single units to final users.

44-45. Retail Trade

The retail trade sector comprises establishments primarily engaged in retailing merchandise, generally without transformation, and

rendering services incidental to the sale of merchandise.

48-49. Transportation and Warehousing

This sector comprises establishments primarily engaged in transporting passengers and goods, warehousing and storing goods, and

providing services to these establishments. The modes of transportation are road (trucking, transit and ground passenger), rail, water, air

and pipeline. These are further subdivided according to the way in which businesses in each mode organize their establishments.

National post office and courier establishments, which also transport goods, are included in this sector. Warehousing and storage

establishments are subdivided according to the type of service and facility that is operated.

51. Information and Cultural Industries

This sector comprises establishments primarily engaged in producing and distributing (except by wholesale and retail methods)

information and cultural products. Establishments providing the means to transmit or distribute these products or providing access to

equipment and expertise for processing data are also included.


NAICS

52. Finance and Insurance

This sector comprises establishments primarily engaged in financial transactions (that is, transactions involving the creation, liquidation,

or change in ownership of financial assets) or in facilitating financial transactions.

53. Real Estate and Rental and Leasing

This sector comprises establishments primarily engaged in renting, leasing or otherwise allowing the use of tangible or intangible assets.

Establishments primarily engaged in managing real estate for others; selling, renting and/or buying of real estate for others; and

appraising real estate, are also included.

54. Professional, Scientific and Technical Services

This sector comprises establishments primarily engaged in activities in which human capital is the major input. These establishments

make available the knowledge and skills of their employees, often on an assignment basis. The individual industries of this sector are

defined on the basis of the particular expertise and training of the service provider.

55. Management of Companies and Enterprises

This sector comprises establishments primarily engaged in managing companies and enterprises and/or holding the securities or

financial assets of companies and enterprises, for the purpose of owning a controlling interest in them and/or influencing their

management decisions. They may undertake the function of management, or they may entrust the function of financial management to

portfolio managers.


NAICS

56. Administrative and Support, Waste Management and Remediation Services

This sector comprises two different types of establishments: those primarily engaged in activities that support the day-to-day operations

of other organizations; and those primarily engaged in waste management activities.

61. Educational Services

This sector comprises establishments primarily engaged in providing instruction and training in a wide variety of subjects. This

instruction and training is provided by specialized establishments, such as schools, colleges, universities and training centres. These

establishments may be privately owned and operated, either for profit or not, or they may be publicly owned and operated. They may

also offer food and accommodation services to their students.

62. Health Care and Social Assistance

This sector comprises establishments primarily engaged in providing health care by diagnosis and treatment, providing residential care

for medical and social reasons, and providing social assistance, such as counselling, welfare, child protection, community housing and

food services, vocational rehabilitation and child care, to those requiring such assistance.

71. Arts, Entertainment and Recreation

This sector comprises establishments primarily engaged in operating facilities or providing services to meet the cultural, entertainment

and recreational interests of their patrons. These establishments produce, promote or participate in live performances, events or

exhibits intended for public viewing; provide the artistic, creative and technical skills necessary for the production of artistic products

and live performances; preserve and exhibit objects and sites of historical, cultural or educational interest; and operate facilities or

provide services that enable patrons to participate in sports or recreational activities or pursue amusement, hobbies and leisure-time

interests.


NAICS

72. Accommodation and Food Services

This sector comprises establishments primarily engaged in providing short-term lodging and complementary services to travellers,

vacationers and others, in facilities such as hotels, motor hotels, resorts, motels, casino hotels, bed and breakfast accommodation,

housekeeping cottages and cabins, recreational vehicle parks and campgrounds, hunting and fishing camps, and various types of

recreational and adventure camps. This sector also comprises establishments primarily engaged in preparing meals, snacks and

beverages, to customer order, for immediate consumption on and off the premises.

81. Other Services (except Public Administration)

This sector comprises establishments, not classified to any other sector, primarily engaged in repairing, or performing general or routine

maintenance, on motor vehicles, machinery, equipment and other products to ensure that they work efficiently; providing personal care

services, funeral services, laundry services and other services to individuals, such as pet care services and photo finishing services;

organizing and promoting religious activities; supporting various causes through grant-making, advocating (promoting) various social and

political causes, and promoting and defending the interests of their members. Private households are also included.

91. Public Administration

This sector comprises establishments primarily engaged in activities of a governmental nature, that is, the enactment and judicial

interpretation of laws and their pursuant regulations, and the administration of programs based on them. Legislative activities, taxation,

national defence, public order and safety, immigration services, foreign affairs and international assistance, and the administration of

government programs are activities that are purely governmental in nature.

oro-medonte medical innovation park (ommip)

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