Policy Coordination

Specialized and general purpose governments, and indeed the arguments of polycentrists and consolidationists, are based upon two separate logics of coordination. In the literature on multilevel governance, it is widely held that coordination becomes more difficult, the more actors that are involved (Hooghe and Marks 2003, 239). Specialized governments are supposed to reduce the need for coordination amongst governments, because they are designed – both in terms of scale and mandate – to fulfill a specific function. General purpose governments reduce the number of governments that need to be coordinated by bundling functional responsibilities

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For public health – where the province is the principal – the GAT scores for municipal and special purpose body service delivery would be very close.

within fewer governments. Polycentrists argue that the types of hierarchical relationships that exist within general purpose governments are not necessary to achieve coordination and that where coordination is needed, specialized governments may coordinate their activities through either competition or cooperation. The Lakewood Plan – a producer-consumer relationship established between Los Angeles County and a number of its constituent municipalities – is often used as an example in these arguments (see Bish and Warren 1972). This arrangement allows the municipalities to contract services from the county, or from county-administered special districts, or to deliver them themselves, or to contract with other producers. Consolidationists argue that it is much more difficult to coordinate the activities of separate organizations than it is to

coordinate the activities of departments within a single municipality. Specialization makes policy coordination more difficult by fragmenting issue areas and discouraging the kinds of trade-offs and compromises that are possible in general purpose governments. It also makes planning and financing metropolitan-wide services more difficult. Foster rather effectively sums up the consolidationists’ position regarding the coordination challenges caused by specialization:

Governments of any type can experience a coordination disaster, for example, the road torn up one year to lay water pipes, demolished the next to lay sewer lines, ripped up again the following year to lay underground cable, and knocked out of service the year after that for routine road repair. When the problem of the “right hand not knowing what the left is doing” occurs on the watch of a general-

purpose government, it is a frustrating but tractable problem of poor management. When coordination problems occur in a specialized world with separate water, sewer, utility, and highway districts, however, these problems are predictable outcomes of institutional autonomy combined with functional specialization. Mandates for inter-district or district-nondistrict coordination are virtually non- existent. Practical efforts to coordinate service delivery are often problematic and transitory. (Foster 1997, 230)

Certainly the types of coordination problems that Foster mentions would be very noticeable, but one would at least hope that poor coordination on such a scale is rare, and that most coordination problems are less blatant. Less visible coordination problems are more

difficult to measure, but still need to be identified in order to be solved. According to Peters (1998, 303), coordination problems can arise as the result of redundancy (when more than one organization performs the same task), lacunae (when no organization performs a task), and incoherence (when organizations with the same clients perform tasks that are at cross-purposes). Because of the importance that municipalities place on economic development policy,

coordination problems caused by lacunae are not expected to be a problem, and will not be a focus of this chapter. Redundancy and incoherence are likely to be bigger problems.

In order to determine whether economic development policy in London and Hamilton is coordinated or not, it is important to get a sense of the types of policy goals both municipalities seek to achieve through economic development policy. Based upon the interviews and the functional responsibilities of the different departments and agencies that deliver economic development services in London and Hamilton, the most important economic development goals include: business retention and expansion, business attraction, tourism, and small business, workforce, and downtown development. This list also closely resembles the survey findings of Reese (2006), regarding the economic development goals of Canadian municipalities. Relying heavily on interview data, this section examines the actors involved and their roles in achieving these economic development policy goals in London and Hamilton in order to assess the extent to which redundancy and incoherence are present in both municipalities. The views of municipal staff and politicians are especially important, because the amount of control that municipalities have over fragmented or consolidated service delivery structures matters for both polycentrists and consolidationsists. For polycentrists, the control mechanism is the contracts with specialized agencies. For consolidationists, it is through the hierarchy of the municipal bureaucracy.

Polycentrists would predict better coordination in London (or at least as good as it is in Hamilton), while consolidationists would predict better coordination in Hamilton. London

The LEDC is the lead economic development agency for the City of London (City of London 2000b, 2005c, 2006b, 2007c, 2008b). It focuses primarily on business attraction, retention and expansion, and workforce development in six sectors: advanced manufacturing, life sciences, technology, institutional and education, regional head offices, and agri/food business (LEDC 2007; Interviews 30 and 32). The LEDC’s strategy and operational plan are developed by staff and approved by the board, and the City has little direct input. As a former LEDC staff member explained:

The members of the City on our board participated in the development of strategy and the operating plan. But the City didn’t say, “here’s the strategy that we want you to pursue”, because that would have put the whole foundation on which we built the LEDC at risk, because if you had a strategy that was coming from the City, it would be a strategy that was coming from politicians. (Interview 29)

A former municipal politician also saw value in this type of relationship, “as long as there was a good reporting relationship between the mayor’s office, council, and regular updates, that system should work quite well without having a lot of council interference” (Interview 31). A number of interviewees believed that the direct involvement of politicians in economic development had the potential to produce incoherence, because of the long time-frames associated with attracting investment and the need for confidentiality (Interviews 29, 31, and 37).

Nonetheless, other agencies are involved in meeting the City’s economic development goals as well. These include the Stiller Centre (expansion and retention, small business

development – start-up technology-based companies), TechAlliance (expansion and retention, small business development – technology-based companies), the Small Business Centre (small

business development), London Downtown Business Association (retention and expansion), Main Street London (attraction), Tourism London (tourism and culture), and the Convention Centre (tourism and culture).50 The level of autonomy that the LEDC and these agencies have in adopting their own strategic plans has meant that, “the City itself does not have an economic development strategy that pulls all of those things together” (Interview 35).

The Stiller Centre and TechAlliance were established in the early 2000s. The City invested approximately $5 million to help get these agencies up and running, and was

contributing around $200,000 in annual funding to each by the end of the study period (City of London 2005b; Bradford 2008; Belanger 2010). Both had some initial success, but by the mid- 2000s, the City wanted better coordination among these two agencies, the LEDC, and the Small Business Centre (Paolatto 2005; De Bono 2005, 2006b). According to a City of London staff member, the City wanted to ensure that the mandate of each agency was clear and that they were encouraging their clients to utilize the services provided by the others. In other words, the City wanted to avoid redundancy. As this interviewee explained, “if they all do business planning, it’s not money well spent” (Interview 30). At the same time, the City was also pushing the LEDC to broaden its focus beyond manufacturing to include more knowledge-based industries. The City commissioned Paul Paolatto, an entrepreneur from the technology sector, to study how these two goals could be achieved. His report titled London’s Next Economy was brought to council in the fall of 2005. The report argued that the City lacked a clear economic development strategy and that there was some confusion regarding the roles and responsibilities of the LEDC,

TechAlliance, the Stiller Centre, and the Small Business Centre. In the subsequent

Implementation Strategy, it was recommended that a new board be created to oversee three

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The London Downtown Business Association is a self-funded business improvement area. Main Street London receives financial support from the City of London and the London Downtown Business Association.

strategic business units: a business attraction, expansion, retention, and workforce development unit, headed by the LEDC; an organic growth unit, headed by a partnership between

TechAlliance and the Stiller Centre; and an entrepreneurial development unit, headed by the Small Business Centre.

An interim board was established, however, the City was never able to bring all four agencies under its control and it was eventually dissolved. According to a former City of London staff member, the process ended up being too acrimonious, as the agencies wanted to maintain their autonomy. This interviewee explained that, “there was a big effort to pull of these

organizations together and align, but it never happened. It simply comes down to people politics. These guys want to run their own show and they don’t want to report to anyone else” (Interview 35). A former City of London politician offered a similar analysis, “all of these organizations have fought against becoming any sort of coordinated body because they didn’t want to lose, I am not going to say identity, but there is a lot of politics involved when you know that some people are going to lose jobs, because I mean, how many CEOs do you need?” (Interview 31). Job competition was clearly top of mind for one person involved whose comments make it clear that the City did receive considerable resistance to its coordination efforts:

London’s Next Economy was done by a guy who was looking for my job… He somehow conned the city manager into believing that London wasn’t doing enough. I hold myself responsible for the fact that I allowed this to happen. He wrote this Next Economy report, which was just a pile of bullshit… In some place in that report, he talked about 10,000 new jobs in the technology sector over the next five years. That then became the mayor’s mantra in her next state of the city address… How many net new jobs do we have? Probably negative 500 since all of this crap was put together. So that’s what that Next Economy report was all about... He thought, “What we’ll do is we’ll put an organization in place that would have LEDC, the Small Business Centre, the Stiller Centre, and

TechAlliance all reporting to this group of people. When this proposal was made I said, “Okay that’s all fine and dandy, now who is going to run that?” “Well we’ll have a president and CEO run that.” “Okay, who is that going to be?” “Well we’ll put somebody in there.” “Who is that going to be?” Because I knew what this guy

was up to. So it came out that it was going to be [him]. So we went to the city manager and said listen, “if that is the shit that is going on, let us know, because everyone of us is out of here right now.” So the city manager realized that he was in the process of offending the better part of the business community in London, so he put an end to that. (Interview 29)

This City’s inability to bring these agencies to heel was seen as a lost opportunity, because staff and some politicians feel as though the activities of these agencies are not as well coordinated as they should be. Interviewees from the City noted problems of both redundancy and incoherence. According to a former City of London staff member, “each of them is tasked to create a

prosperity agenda and they are in silos and they do not work together. This fragmentation of responsibility makes coordination more difficult and does not serve the City’s interest” (Interview 35).

Again, these comments were echoed by a former municipal politician:

While they will say, “oh yeah, we work together.” It is not reaching its potential because there are so many people just fighting to keep a little piece of the pie. TechAlliance is a great example; they should be a part of the LEDC with the work that they do. They have a relationship, under the director of life sciences, I am sure that they work together on a number of things. But they have created their own Taj Mahal of organizations. They have all these people working there doing all sorts of stuff and it’s not necessarily aligned with the economic priorities of the community. Even though they are successful in what they do. You can imagine how much more successful they would be if there was coordination under one body. (Interview 31)

The Next Economy report only looked at the LEDC, TechAlliance, Stiller Centre, and the Small Business Centre. A former municipal politician explained that similar efforts were

undertaken to align other organizations involved in economic development as well, but that these ran into the same obstacles:

… Tourism London, the Convention Centre, places like that don’t want to be a part of the LEDC. They like their own identity. Especially Tourism London – very, very, highly political… It has always been highly political because the general manager there used to be the person that did economic development for the City of London many, many years ago. He thinks he knows it all. For years,

we tried to better align all of those organizations that have an impact on what the City is doing, but there was always a continuous fight against doing that. So it has always been a struggle and I think that it is a missed opportunity to not have them better aligned in what they do. Council has never really had the courage to make the really hard decisions about that. I think that they should all be under the same umbrella with one person and then having different departments of it, but I don’t think that they will ever happen here because I don’t think that there is enough courage to do that. (Interview 31)

This interviewee expressed frustration at the City’s inability to bring all of these organizations under the control of a single agency:

It’s not like they pick up the phone and have a lot of discussions with each other about how to do things. They are all doing their own thing. They have all had some success, so it doesn’t force the issue as much. As long as each of those organizations has enough votes on council, it will always be a separate body for tourism, a separate body for TechAlliance, separate for the convention centre, separate for this, separate for that. They all, in their own right, have their own documents, they have their own board of directors, their own strategic directions. You could go to anyone of them and find that information. I always felt that we needed to do more, but it was very difficult, very political to try and bring any of those groups together. And really, the City should have been able to, because it controls the funding for most of those bodies. Not all of them, TechAlliance has their own funding. I just don’t see it ever really happening. (Interview 31)

Thus, even though the City provides the bulk of the funding for most of these organizations, it has been unable force them to comply with its wishes, because they all have their own support bases, which have influence over members of council.

Interviewees also noted some challenges associated with coordination between the City and the LEDC at an operational level. Even though the LEDC is the lead economic development agency, the City maintains an inventory of serviced industrial land, and has responsibility for land use and building permit approvals. These are two areas where incoherence became a problem during the study period, although to varying degrees. Dealing first with the sale of City- owned industrial land, the City obviously wants to sell its industrial land holdings, but the

selling land below market value. The LEDC wants to land clients, and that involves getting them the best deal possible. During the study period, the LEDC would negotiate land sales with the City on behalf of its clients (Interviews 29, 30, 31, 32, and 35). During these negotiations, LEDC staff viewed themselves as agents of the client, not the City. As a former LEDC staff member explained:

We brought potential investors to the City, but we didn’t act on behalf of the City. So our clients saw us as somebody who would get them the best deal that we could get for them. And if that was from the City, I would beat the shit out of the City to get best pricing, best terms, best whatever. They found that difficult, because they said, “but we are paying you, so who is the customer here?” And I kept saying that “the customer here is the potential investor.” (Interview 29)

As a result of this practice, the City would sometimes end up selling land for less than it had originally intended, or it would provide extra servicing. In other cases, the City would lose out on an investment, because it could not meet the investor’s expectations – in part because of what the LEDC was counselling them to ask for (Interviews 29, 30, and 35). This is a clear example of incoherence, as two organizations serving the same clients had competing goals. The City was also uncomfortable with these negotiations, because it knew that the outcomes of this process bordered on bonusing (Interview 35). LEDC staff, however, were less concerned. As a former staff member explained, “the issue of bonusing is an interesting discussion for people in the legal department, but beyond that nobody really gives a damn” (Interview 29). More will be written on the sale of city-owned industrial land in the next section.

When a client does commit to investing in the city, both the City and the LEDC pull