SCDC assets & activities to be transferred to City of Surrey

                                    CITY OF SURREY MEDIA RELEASE – June 16, 2020

Surrey BC– Surrey City Council has voted to dissolve Surrey City Development Corporation (SCDC), a for-profit development company owned by the City, and transfer its assets and operations over to the City of Surrey..

“Council believes the time is right to bring these activities back under the purview of the City and have the work done in house,” said Mayor Doug McCallum. “I would like to extend my sincere thanks and appreciation of the staff, the board members, and President and CEO of SCDC for their efforts and contributions to Surrey.”

As directed by Council, SCDC is working with City staff to plan a smooth transition process.

“SCDC is immensely proud of its work in advancing the City of Surrey,” said Michael Heeney, SCDC President and CEO. “I am encouraged that the City will continue work on many of SCDC’s initiatives and we will work with them to ensure a seamless transition.”

SCDC was formed with its own management team and board of directors in 2007 to optimize the value of surplus city-owned lands. The City of Surrey has been the sole shareholder of SCDC.

“As we work with the best interests of our citizens in mind, Surrey City Council will continue to sharpen its focus on core city mandated services and how best to streamline them,” said Mayor Doug McCallum.

Media enquiries:
Oliver Lum, Communications Manager, Office of the Mayor, City of Surrey                                604.591.4519    owlum@surrey.ca

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BACKGROUNDER:  SURREY CITY DEVELOPMENT CORPORATION (SCDC)

In 2007, Surrey City Council established the Surrey City Development Corporation, a for-profit entity whose mandate is to develop City-owned surplus lands in ways that advance the city into a more modern and complete community, socially, culturally, economically and environmentally.

While the City is the SCDC’s sole shareholder, the corporation operates at arm’s length. It has its own management team and its own board of seven directors. Board membership includes two senior City staff and five independent board members selected by the City for their expertise in real estate development, finance, and board governance.

SCDC’s role is to provide a profitable return on the City’s surplus real-estate holdings. It acts as a catalyst in optimizing the value of the City’s real-estate holdings through land- use planning, project initiation and strategic partnerships.

SCDC works closely with its sole shareholder to ensure its priorities are aligned with those of the City. Each year, its annual operating budget and 5-year business plan is presented to Mayor and Council for approval.

Yearly Dividend

SCDC has provided consistent revenues for the City to support its goals.

Since 2013, SCDC has paid a $4.5 million annual dividend to the City. By the end of 2019, had paid it a total of $31.5 million.

The corporation is on track to pay another $4.5-million dividend by the end of 2020, bringing the total of dividends provided by SCDC to the City to $36 million.

The SCDC has a cumulative surplus of $46 million, which is being grown and reinvested into future projects.

The market value of SCDC’s real estate portfolio totaled approximately $250 million at the end of 2019.

SCDC has the unique ability to team up with partners on complex developments to enhance growth, opportunities, and the social well-being of Surrey. Often, these are projects private developers, or the government would not typically take on by themselves but through SCDC’s vision and initiative they are catalyzed.

Recent accomplishments

The company has a record of creating innovative projects that have had a positive impact on the
City, including:

The 2019 completion of 3 Civic Plaza and Hotel: a highly acclaimed 52-story mixed-use project
in Surrey’s City Centre. SCDC   served as a catalyst and partnered with the Century Group in bringing this development to reality. The much-needed amenities it brought Surrey, including the 144-room boutique Marriott
Hotel, set a standard of excellence for the future of the City Centre.

• The Campbell Heights project: SCDC signed a multi-year lease with Walmart, which is investing
over $175 million into a distribution facility on the site. It will provide SCDC and the City with
a long-term revenue stream while maintaining long term ownership of this valuable piece of
industrial land. Walmart’s presence and strong brand adds value to the significant remaining
landholdings of SCDC and the City. This is the most recent installment in SCDC’s overall 300-acre
industrial development initiative in Campbell Heights.

Recent developments

In 2018, the City of Surrey welcomed a new City Council. Throughout 2019, SCDC’s management and
Board met with the new Mayor and Council to collaborate on a new set of priorities for SCDC to help fulfill Council’s vision for the City and its real-estate holdings. This co-operative effort culminated in a new 5-year plan for SCDC, which Surrey City Mayor and Council overwhelmingly approved on December 16, 2019. This repositioning plan was the result of many discussions and meetings that SCDC held throughout 2019 with the City.

Discussions continued with the City on a re-branding and renaming for SCDC well into the first
quarter of 2020. On April 22, 2020 Mayor Doug McCallum wrote to the company advising that Council
had voted to dissolve SCDC. They instructed SCDC’s management and Board to work with City staff to
prepare a plan for the orderly transition of the company’s assets and activities into the City of Surrey.

SCDC is currently working with City staff on this transition plan in a way that will continue the activities set out in the 5-year plan Council approved late last year and ensure that they will continue on after the transition.

FREQUENTLY ASKED QUESTIONS: 

Why is Surrey City Development Corporation being transitioned into the City of Surrey at this particular time?

The City of Surrey is the sole shareholder of the SCDC and as its owner, can make decisions like this one. The City supports the work of SCDC and respects the capabilities of its Board, management and staff; however, at this time Mayor and Council has requested that SCDC’s assets and activities be brought in-house. Please contact the City of Surrey or the Office of the Mayor for more details.

How and by when will SCDC be dissolved and transitioned to the City?

SCDC and City staff are actively working on a transition plan for the company. This complex process is expected to take about a year to complete.

What will happen to SCDC properties?

There is no plan to sell any SCDC properties beyond those previously identified for disposition in SCDC’s 2020 Business Plan, approved by Mayor and Council in December 2019. The plan is to have SCDC property ownership and contractual relationships transferred to the City and to ensure the activities in the approved 5-year plan continue.

What will happen to sites SCDC is currently investigating for development, such as the Kwantlen Park housing complex, Campbell Heights and Centre Block?

As with other projects identified in the 5-year plan, work will continue in these properties as planned.

What will happen to SCDC staff?

They will continue to work through the transition, after which there may be opportunities for them to continue on with the City of Surrey.

What will happen to SCDC projects, partnerships and other initiatives with stakeholders?

SCDC will continue to advance the projects and initiatives identified in its 2020 Business Plan.  The plan is to have all active contracts and assets ultimately transferred to the City, likely in 2021.

Who will manage SCDC affairs during and after the dissolution?

Until the transition is completed, SCDC Board and management will continue to run the company in consultation with their shareholder, the City of Surrey. After the transition, the City will directly manage the ongoing operations.

Will contracts with SCDC be honoured by the City?

While the detailed planning is still in progress, it is anticipated that all SCDC contracts will be assigned to the City, who will take full responsibility once the transition is complete. Until that time, SCDC will continue to honour all active contracts.

What are SCDC’s current active projects?

SCDC is primarily active to two areas of the City of Surrey.

In Campbell Heights, it has two revenue properties and two serviced sites that will be developed as revenue properties. It is the City’s intent that long term ownership of all these properties remains in City hands. In the City Centre, SCDC is focused on the development of two major redevelopment projects adjacent to the Gateway and Surrey Central Skytrain stations.

What is SCDC’s real-estate portfolio worth today?

The market value of the portfolio was appraised at approximately $250 million at the end of 2019.

How much has SCDC contributed to the City financially?

Since 2013, SCDC has delivered an annual dividend of $4.5 million to the City of Surrey. SCDC is on track to provide another $4.5 million to the City by the end of 2020 for a total of $36 million inclusive over the past eight years.

What has the dividend been used for?

Over the years this dividend has been earmarked by Mayor and Council for a number of different initiatives including:

·         A biodiversity conservation program

·         Technology infrastructure

·         Library capital improvements

What will happen to the dividend once SCDC operations are transitioned into the City?

Please refer to the City of Surrey.

Aside from providing a financial return, what else has SCDC contributed to the City? 

SCDC has undertaken a number of different activities that have advanced the City in non-financial ways.  This includes the creation of 300 acres of much needed industrial lands in Campbell Heights and advancing the City Centre with such positively impactful projects as the highly acclaimed 3 Civic Plaza and Hotel.

What costs will be associated with the transition of SCDC to the City?

These will be determined as the process of moving SCDC activities in-house continues. It is too early to tell.

Will there be savings once SCDC activities move to the City, for instance in job consolidation?

These will be determined as the process of moving SCDC activities in-house continues. It is too early to tell.

Where will the operations and offices of what was SCDC be headquartered as a result of the move?

Please contact the City of Surrey.