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The Higher ED Blog: Elliot Lake’s other economic development success story

Michelle Madden / February 29, 2016

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The Higher ED Blog: Elliot Lake’s other economic development success story

For 40 years, Elliot Lake was famous for one thing: uranium mining. After the discovery of a massive deposit of uranium ore in the early 1950s, it quickly grew from a small logging settlement to an industry town. The mining companies built thousands of homes to accommodate miners and their families. At its peak in 1981, Elliot Lake had a population of about 20,000.

When the last mines closed in the 1990s, the provincial government projected that the population would decline to 500 if the jobs were not replaced. Refusing to become a ghost town, the local government pivoted and decided to cater to low and middle income retirees from Southern Ontario. It donated a quarter of its total housing stock to a not-profit corporation, Elliot Lake Retirement Living, which has been successfully renting and selling units ever since.

Most people, particularly Ontarians, are familiar with that story.  For his Year 2 paper for the University of Waterloo’s Economic Development Program, Daniel Gagnon wanted to tell a lesser known success story out of Elliot Lake. Daniel served as the Economic Development Director for nearly a decade. In that role, he had a front row seat to Elliot Lake’s 13-year effort to turn provincial Crown waterfront land into cottage lots, which was a long battle that eventually paid off.

The legal battle to develop Crown land

Elliot Lake is a municipality of hundreds of lakes, all on Crown land. The City started to explore waterfront housing in 1980s but it was clear that Ontario Ministry of Natural Resources (MNR) would not give up the land easily. Crown land, which accounts for more than 95% of northern Ontario, is managed by the province and preserved to protect the environment and ensure access to lands by the public and resource based industries. At the time, it was unprecedented for a municipality to develop Crown waterfront land, even if it was within municipal borders.

They decided to lobby the MNR extensively through 1990s, emphasizing the economic development impacts for the community. The message finally started to gain traction when the Ministry of Northern Development and Mines joined the cause, and the City pre-emptively carried out environmental studies and draft management plans for 20 candidate lakes.

A major breakthrough came in 2001 when the City found an MPP willing to introduce a private members bill. The City of Elliot Lake Act gave the City the authority to develop Crown land for residential purposes. The Act came with several conditions: they could not raise taxes to pay for the development and had to create an arms-length non-profit corporation, the Elliot Lake Residential Development Commission (ELRDC), to manage the marketing and development. The City gave the Commission $1 million from its reserves as seed money, and it would have to rely on sales revenue after that. The ELRDC signed a Memorandum of Understanding (MOU) with the MNR establishing the process for securing Crown land and value of that land. The province eventually gave the green light to 404 lots on 10 lakes, selected based on their environmental capacity.

Testing the market

With the lots approved, the ELRDC could get to work. However, before it could start selling the lots, the City needed to ensure that the sales would actually promote economic development. Each title was given a covenant requiring the buyer to build a reasonably sized dwelling within a given deadline. This would prevent speculation, ensure the creation of jobs in construction and servicing, and increase the assessed value of the land. If the conditions were not met, the municipality had the right to buy back the lot for 80% of the purchase price (by 2012, only 9 lots were re-purchased).

Now the Commission needed to test the market. The City provided a gravel road and hydro to 24 of the most easily accessible lots and began accepting sealed bids of at least $27,000. The auction was advertised through a website, print ads in nearby newspapers, and the Cottage Life trade show in Toronto. Between spring and fall of 2003, 20 of the lots were sold for $27,001 to $46,000. The other four were quickly sold to bidders who lost out on their first choice.

Economic impact

Many of the original 404 lots were dropped from the plan for various reasons, but by the end of 2011, 253 lots were sold. It is estimated that each buyer invested at least $227,500 in the purchase price, lot clearing, building, and permits, accounting for a total economic stimulus of $57 million. Much of that spending went to local businesses like contractors and landscapers. They were so busy that the City created a marketing campaign to attract skilled labourers to the community, and contractors up to 200km away saw increased activity.

The project was also successful for attracting residents. The buyers were younger than the retirees attracted by the retirement living project (median age: 47, ranging from 26 to 72) and nearly 80% were non-local (over half of those from the GTA and southwest Ontario).

The municipality saw direct benefits as well. Residential waterfront assessment grew from $7.6 million in 2003 to $27 million in 2012. Net revenues from waterfront taxation rose from zero to $1.6 million in the same timeframe.

Elliot Lake moving forward

Elliot Lake classifies the cottage lot project as a success. The population has stabilized around 11,000 people and the amount of stimulus created by the project has been significant.  An additional 700 lots are in the works for phase two, but the momentum has slowed as the neighboring Serpent River First Nation has concerns it should have been better consulted and compensated for the development on their traditional lands. As of 2015, negotiations are ongoing.

Should other municipalities with Crown land pursue a similar path? Perhaps, but only if they’re ready to take on the legal and environmental challenges described above. The province has given no indication that it is willing to repeat this experiment elsewhere, so there is no guarantee of approval. For those economic developers who are undeterred, Daniel says you’ll need to: secure a private members bill (or some other legal authority), make friends in the regional MNR office, collect years of environmental data on prospective lakes, have a reasonably harmonious relationship with neighboring First Nations, and possess the “capital and risk threshold to enter into the muddied waters of real estate development”.

With these ingredients, municipalities with few other prospects and dwindling traditional industries may be ready to follow Elliot Lake’s lead. The only other ingredient is a steadfast refusal to become rural Canada’s next ghost town.

 

About the authors

Michelle Madden is the editor of Higher ED. She is also the Outreach Manager for the Economic Development Program and a graduate of the LED master’s program.  She has authored a number of the articles in this series on behalf of the students, and has published several of her own blogs on economicdevelopment.org as well. Follow her on Twitter at @michelle_mad.

Daniel Gagnon was born and raised in Northern Ontario and began his career in the federal government in Ottawa after graduating from the University of Ottawa. He moved to Elliot Lake to pursue a career in municipal economic development with the City of Elliot Lake, eventually becoming Chief Administrative Officer in 2010. A graduate of the University of Waterloo’s Economic Development Program, he returned to Eastern Ontario in 2011 to lead the Township of North Glengarry as CAO where he resides now with this wife and two boys.

About the series

Higher ED: Insights for the Next Economy is a platform for students, guest speakers, staff and faculty of the University of Waterloo’s professional and graduate economic development programs to share knowledge with the field at large. The series takes works destined for an academic audience and reworks them into a fresh, easy-to-digest blog article.

Established in 1988, the Local Economic Development program is the only master’s program in Canada devoted solely to local economic development. It offers a balance between theory and practice by combining coursework, a major research paper, an internship, and weekly seminars featuring guest speakers. Students are prepared for careers in local, community, or regional economic development.

The Economic Development Program is a nationally-accredited provider of professional training. It delivers certification programs and seminars that offer a deep understanding of the Canadian context in a convenient block format. Peer learning is combined with informative lectures and practical case studies to provide dynamic instruction that is beneficial for junior and senior-level practitioners.

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