Communitech photo: Anthony ReinhartView from the ‘Loo: Carl Zehr, innovation mayor, prepares his exit Anthony Reinhart September 18, 2014 Columns, Communitech, Ecosystem, View from the ‘Loo Waterloo Region is a lot of things, but a hotbed of political scandal is not one of them. We seem to prefer modest leaders who keep a steady hand on the wheel and a light foot on the gas pedal, especially when it comes to change. And, as long as that’s how they perform, we reward them with multiple terms in office. You could look to Kitchener Mayor Carl Zehr, the longest serving chief magistrate in the history of the region’s largest city, as the ultimate example. And you would be wrong, at least partly. There’s no doubt that Zehr, mayor since 1997, is as modest and steady as they come. But if you look at the change he led during that time, you’ll find a man who was ready to push the pedal down and risk considerable capital – political as well as financial – on what many had begun to see as a futile mission: fixing downtown Kitchener. While it’s far too soon to shout “mission accomplished,” the evidence on the ground shows the long-odds bet laid by Zehr and his council colleagues – specifically, the $110-million Economic Development Investment Fund they approved in 2004 – is already paying handsome returns. That evidence includes a tech boom that continues to accelerate as it spreads out from the Tannery complex; a surge in high-density housing development; increasing academic activity and steady growth in downtown dining and entertainment options. Earlier this year, Zehr, 69, announced he would not run for re-election when voters go to the polls Oct. 27. As he prepares to wind down his political career and hand the reins to a new mayor on Dec. 1, he made time this week for an in-depth interview about the groundwork behind the downtown’s nascent recovery, and about what he sees ahead. Q – Tell me about the downtown Kitchener of 1997. What was it like? A – Certainly the downtown was a focus then, already. In fact, the previous mayor had started a task force on the downtown, and a report had been delivered to the council of the day. Prior to that point, in terms of what was on the street, the inner city had been trying to compete with the suburbs by doing something similar. In the ‘70s, we had people exiting to suburban malls, so it was ‘let’s build two malls’ (downtown). So, (those downtown malls) were emptying out in terms of the retail operations. They were sort of a glitzy kind of thing at first because they were new, but they did not have the staying power that the suburban malls did, for a variety of reasons. So, it was kind of depressing in the late ‘90s, in terms of empty shops and storefronts – and there still are; in the core of a city there will always be empty storefronts and turnover; it’s the nature of the beast – but the malls in particular were becoming more of a blight than anything else. And so, even at that time, the conversation had to turn to ‘how do we get more people living, working and playing in the core of the city?’ and getting a critical mass of people in those three categories was probably going to be the end result. Some people at the time said ‘bring in a big retailer.’ Notwithstanding the failed experiment with the malls, there were still some who would say ‘get a big, high-end retail shop that will attract people, and everything else will build around it.’ No, because if the people aren’t there, the retailer can very easily take a hit and close up shop and be gone in two years’ time, and you’ve got nothing. We had to flip it around and get the critical mass in place first. That will then drive the demand for retail and services. We’re still not there, even after all these years, but there’s been a dramatic change. Fast-forward then to the early 2000s, and ultimately 2004, when we created the Economic Development Investment Fund (EDIF). Now, before I go into that, I’ll go back a little bit in my mind here as to what else it looked like. There was less animation on the street, and by that I mean people walking the street at different times of day. We had just opened up, four years earlier, this City Hall; in ’93 it was opened. It was still a relatively inactive place at that point. We did not have the kind of animation on the Civic Square that we do today, with entertainment. The rink was here, but the square wasn’t programmed, and we now do that. And people started to get a completely different perspective on what the core is. People are just starting to realize that there are some specialty boutique-type shops in the core, and I think that will only improve when you have another 500 people – I’m thinking of the City Centre condos and the 1 Victoria – right here. That will help to change that even more so; that’s starting to get the critical mass. We’re still not a Toronto, and I don’t think we want to be a Toronto in terms of the density, but it certainly will increase quite dramatically. As a bit of an aside, we had two planning proposals last night – one was on Walter Street, right beside King Edward School, and the One Hundred Victoria, where Momentum has their second proposal – and they all deal with intensification. For different reasons, they were yet again deferred, but what is frustrating me at this point in time is, some members of council who will always say ‘I’m in favour of intensification . . . but not this one.’ Those people, in my mind, have yet to approve an intensification project of any consequence, in the name of protecting neighbourhoods. You have to be sensitive to that, obviously, but we are in a transition time, and that long-term perspective is still not grasped by everyone. At the same time, by the way, those people are saying ‘we can’t have any more greenfield development; we’ve got to stop urban sprawl.’ You just can’t have both ends of the stick. So, (the downtown) was devoid of activity, it was devoid of spirit, it was devoid of people. It was devoid of good ideas. And it took some getting down to the bottom of the barrel to realize something dramatic had to happen for people to capture the vision and say, ‘We have to do something to make people sit up and take notice.’ I would say in 2004, ultimately, it was EDIF, and the commitment to the Catholic school board in doing the St. Mary’s-St. Jerome’s stuff, Laurier with the school of social work, and the biggie being the University of Waterloo with the School of Pharmacy, and then secondarily McMaster with the medicine school. And I still recall quite vividly the developers, Andrin Homes, who are now doing City Centre, saying ‘we’re not sure what we’re going to do with the Kaufman building; offices, residential, a mix or not.’ And virtually overnight, once we had announced EDIF and the School of Pharmacy, they said ‘OK, we now know what we’re going to do – residential,’ and the rest is history. It was some time after that, a few years later, that the principals of the Rose Corporation – ultimately the Tannery – came into town on a Saturday, actually. I was on my vacation. And these folks wanted to come in and talk about what we were doing, because they had only a week to put together a proposal for purchasing that property; they had run up against a deadline. And we gave them a flavour of this education/knowledge-creation cluster that we envisioned for the downtown. And there, too, I guess the rest is history. Within a week they put their bid in, got it, and we had what we have today. That’s animation. That’s people. That’s excitement. That’s momentum. And now, while it still needs to be encouraged once in a while by government, and supported particularly by the provincial and federal governments and the research side, that momentum of change is being driven by the private sector, not the local government. That’s where the seed money came into play. Of the $110 million of EDIF, if you take the library at $32.5 million out of that, and some other odds and sods, about $75 million was related to downtown things. And that’s been leveraged about 10 times over in terms of development by the private sector and other institutional buildings and development, to say nothing of the uplift in values of properties. Q – There had been numerous attempts to kickstart the core. Why were you and your council able to succeed where others failed? Was it simply that process of prioritizing? A – I think perhaps it was partly the prioritizing, but it was also a matter of playing out the calendar. Time had to march along, and sometimes you really need to be able to see what the issue is for a while before you say, ‘OK, we really have to do something about it.’ The previous council, ’94-’97 under Richard Christy, had started thinking about it and was on the right path, but hadn’t gotten to the execution stage yet. So it took us from ’97 to 2004 – another seven years, essentially – to actually get things under way. And it took some creative minds, internally, in the city, to package that and to put forward a proposal. You’ve probably heard the infamous story of the plan on the back of a pizza box. Have you heard that one? It was Jeff Fielding who was the CAO at the time, and Carla Ladd, who was working on strategic services at the time. They were away skiing one day, and they came back with this scratched-out stuff on the back of a pizza box. That has been the icon that I’ve used as a prop once in a while; it’s in our archives. It’s hard to say what the heck it said, but that was the genesis of a plan to start making some of those bold moves. One of the first things we did was an employment lands study. What that was telling us – and we were trying to take the high road at the time – was, yes, we have lots of land in the southwest part of the city, but it’s not very conducive to employment lands. It’s very hilly; even today we know it’s partially on the moraine. So we said – and this is where the high road came in – in the long term, industrial, traditional employment lands are probably going to be in the north end of Cambridge and around the airport in Woolwich. And that’s within the Region, and that’s going to be supplying jobs to Kitchener citizens; let’s get behind that. We’re not going to reap the benefit of the taxes, but so be it. In the short term, we have some infill areas – Huron Business Park; Bingemans Centre Drive – and in the medium term was turning our eyes inward to the under-utilized lands and buildings in the core. I give full credit to the council of the day. There was an election in the fall of 2003, so we had already begun the work in the fall of 2003, but it wasn’t ultimately approved until 2004, early on in 2004, because of the budget process. We had seven people on council. It went through on a 6-1 vote. I give that council credit for having the guts and the courage to take the long-term view on this, and look at the potential return on this, rather than just being somewhat protective of their own turf for another three years until the next election came around. It was a mature council, it was experienced and therefore had some political capital that they could expend on this. That would be difficult to do with (the current) council. It was a bold move. It was a risky move, there’s no question about that. It was a calculated risk. I mean, risk is good and risk is bad. In this case, it was trying to read the tea leaves, recognizing that there was going to be a shift in the economy – this is pre-2008, of course – and manufacturing was starting to wane. So, how do we broaden the economy to help pick up the slack as manufacturing jobs are waning and leaving this community? That’s where I’d go back to that one phrase: the education/knowledge-creation cluster, and the tech world. It was through those discussions, through those partnerships with the university, discussions with Communitech, ultimately Google, and Desire2Learn . . . and then, of course, people started to see the vision going all the way back to the Rose Corporation and so on. Q – Tell me about the role the tech sector has played in moving this process along for the city. A – Certainly that sector has created the excitement, the momentum and the jobs that we see today. My observation – and I hope this isn’t taken the wrong way – but we’re told that the tech sector likes to have a society that is eclectic; the arts and the culture and the creative side of the community; the Jane Jacobs stuff. Yet, when we see them – and maybe it’s going to change when we get more people in the upper stories here, which is happening now with some of the tech firms – but those in the Tannery are probably more insular, and don’t come out of the building. Manulife, as an example, has a lot of very smart people in that building, but they have their own cafeteria inside. Google has its own cafeteria in there. There isn’t as much reason for them to come out, and that would be one of my disappointments – that they don’t participate and venture out and discover some of the other things that are occurring in the core. They can help it to become an even more vibrant place. That would be another goal; to draw people out of those buildings during the daytime. And again, as there’s more critical mass, there will be more food and beverage places available so that they don’t have to . . . go to Toronto in the evening. There will be enough entertainment value right here in this community. Q – Despite the improvements downtown, people still express doubts about its safety, and tired old stigmas seem to persist. How do we overcome this once and for all? A – I don’t know if we’ll ever get rid of it, but it will take some time yet. There are those kinds of comments that are made, but when you ask the people, ‘When was the last time you were downtown?’, they say, ‘Well, I haven’t been there for 10 years.’ They haven’t experienced what is here, and the older the person is, the more they will remember coming downtown for shopping. This is not a traditional shopping district at this point in time. It’s destination shopping, it’s boutique shopping, and that’s what makes it difficult for entrepreneurs in the core, and that’s why you get some of the turnover that does occur. When people come down here for festivals or for other big events, they say, ‘Oh, when did you do this? When did you fix the street? When did this shop come here?’ So, it’s gradually improving, but I think it will take some years yet before that will occur, that people say, ‘Well, why don’t we go downtown?’ Some of the fears people have coming downtown is that it’s not safe. The statistics are lower here than they are in many of the suburbs. So, the fact that it’s not safe is not an accurate statement. Now, will you find more people homeless and people walking the street in the core than in the suburbs? Yes you will, because this is where the social service agencies are, but every major city has that, and we have to deal with that as much as possible. Q – Do you think residents of a city have an obligation, as citizens, to support their downtown? A – Yes, I think you do, and you should. I don’t know if it’s an obligation, but one of the reasons – even though I’ve lived in the suburbs most of my life – that I’ve felt so strongly about the core, is that it is the litmus test of what a community is all about. When I’m travelling, be it in North America or even in Europe, you drive through town and say, ‘Here’s the activity,’ and you get out and you walk. And you make a judgment call about what that city is like, by what the downtown looks like. So, civic pride should not just be about your own neighbourhood, but about the city, and all parts of the city. The core is one of the key definitions of a vibrant city, and so, therefore, it’s legitimate that we put resources into it. But there has always been a chorus of voices that say, ‘Wait a minute; I need a new playground in my neighbourhood in the suburbs; I need this; I need that.’ So there is more attention being put on that. Now, we have spent a lot of money in the core – justifiably so, I believe – but we’re now in a rebalancing mode. Q – If these good things keep happening, is there a risk we’ll lose our ability to accommodate people of all income levels downtown, due to rising rents and gentrification? A – That’s an excellent point, and there have been some people who have recently been talking to me about that very issue, the gentrification of our core and whether it is pushing the more vulnerable of our society out. It is something we have to be very cognizant of, but that, I believe, does not mean we stop what we’re doing. We have to make sure we are accommodating all socioeconomic groups. In my State of Our City address this past year, I said that one of the things all of us need to be concerned about is dealing with the poverty issue. There are many degrees of poverty – the working poor, and so on. But first of all, the people on the street usually are there not because they want to be. I don’t remember the percentage, but a large percentage of the people on the street have mental illnesses or addictions, and it keeps them from enjoying the rest of society. We collectively have to tackle that, and if that means helping to take care of those people on an interim basis, then that’s what we need to do. We’re a wealthy society, we’re a relatively wealthy community, and we should be able to look after those who can’t look after themselves for things that are probably not of their own doing. So, that means that as rental rates go up here in the core, some may have to find lower rents, and may have to go a few blocks. And it’s not designed to push them out; it’s just an effort to give that impression of helping to define the city, that I talked about earlier on. Housing is primarily the region’s responsibility, but as an example, Kitchener Housing is a not-for-profit that was started by the City of Kitchener. It’s an independent body, but appointed by the City. It has 650 or so units under its responsibility. Some, but not all, are in the core – the Victoria School area on David Street is a good example of that – and that’s maintaining some very respectable housing for those who are living on the edges. We’re going to have to continue to do that, but it’s not just up to the City of Kitchener to do that. A number of years ago, when the allocations were being made for new units to be built, from the region, there were some people who didn’t like what I was saying, and I was saying, ‘No more for Kitchener.’ It wasn’t that I didn’t think we should be doing this, but Waterloo in particular, and Cambridge and the townships, weren’t taking their fair share. It’s very important that you don’t have an over-concentration of people of any one particular sector in the community, because that defeats the purpose of trying to improve the lives of everybody. Q – What did the LRT experience tell you about where we’re at as a community – the acrimony, the delays, the angst, the fear? A – It’s probably human nature to have those fears, but I think it’s that some people are looking strictly at the current time, and maybe the next five years, but have difficulty envisioning what this community will be like in 20 or 30 years from now, and want to maintain that small-town feeling. But when they’re doing that, they have small-town thinking. We are going to continue to grow, so it’s better to be planning for it so that we actually can enjoy the nice things of life without being stuck on the road. We physically don’t have the space to just keep adding roads. The difficulty with the most vocal of the opponents to the Ion (is that they) are refusing to accept the facts as they are given out, in terms of the cost. Yes, it’s a lot of money. It’s $818 million, and $1.9 billion or whatever it is, over 30 years. That’s over 30 years, and that is very doable for this community. It’s already essentially baked into the tax rates which we have, and what I always come back to about taxes is, when people say our taxes are too high, and the rate increased 1.4 when inflation was 1.25…we always try to be around (the rate of inflation), but when you compare what this community is getting for its taxes, and where we are on the scale, Kitchener has currently about the third or fourth-lowest property taxes in the province of Ontario for our peer cities. So, even if you have a rate 0.2 higher than what you think it should be, it’s minuscule compared to what’s happening in our peer cities, and so the value is significantly greater here. Q – What kind of community do you see when you look ahead to 2024, a decade from now? A – Well, physically there will be more intensification. There will be more high-rise buildings around here. But they don’t have to be towers. When you go into the west end of Queen Street and King and some of those areas in Toronto, there is intensification with a much lower-rise type of building. I remember 15 years ago taking a trip down there with a number of people to look at that kind of housing, and that’s the kind of intensification I think you’ll end up having a bit more of, that mid-rise (development). People will be much more comfortable with that. It has more street presence than the tower, and probably helps to build the community more than the high-rises. In terms of activity, barring another major economic recession or upheaval across this country, I think you will see exponential growth of the technology sector. I think we’re going to see a continuing recovery of the manufacturing sector, but it will be more advanced manufacturing, and not necessarily the same number of jobs that we had before, because of technology. I think the service industry has probably a lot of growth left in it, because the bubble of baby boomers will be looking for those kinds of services. That’s not just in the core of the city, but it’s just like my wife and I; we’ll have to make a decision at some point in time – when do we want to not be in a bungalow, and be in some other area where we don’t have the same kinds of responsibilities? I see momentum continuing, and it’s because we have the likes of Iain Klugman at Communitech, Rod Regier and Brian Bennett here at the City of Kitchener, who are out hustling and making contacts and speaking to the people who find (Kitchener) attractive. I’ll leave names out of it, but there were a couple of people who came to see me this past week – one of them was here before, and he brought someone else in, because he was so excited about what we were showing him as to what’s happening in the core. These guys have money – gobs of money – and they’re looking to do investments. So, you can have physical investment in the structure, but then they have to bring the companies and the people here as well, so I think that’s where the momentum will come. Anthony Reinhart is Communitech’s Director of Editorial Strategy and senior staff writer. View from the ‘Loo looks at the issues, people and events that shape Waterloo Region’s technology sector.