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Before they purchased a hulking former leather tannery in Kitchener – a symbol of disappearing traditional Ontario jobs in the city's core – two Toronto-based developers asked to meet with this city's planners.

When they arrived, Cadan Inc. partners Lana Sherman and Gary Maister were greeted by a contingent of top city officials and Mayor Carl Zehr, who broke off his vacation to head the meeting in the summer of 2007.

"That sent such a positive, strong signal to us," says Ms. Sherman, managing director of Cadan, still astonished by the reception which put their Tannery project in motion. "It meant the city was going to work with us."

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The meeting highlighted Kitchener's strategy of tax tools, zoning and an open-door attitude to woo investors to shed its blue-collar image. One recent success – renewal of the Lang Tannery as a 21st century home for digital media start-ups and giants – offers lessons for municipal leaders and developers.

"The city of Kitchener really put its money where its mouth was," observes Karl Innanen, managing director of the Waterloo region office of Colliers International. "We have overcome inertia and things are happening."

Three years before Cadan's visit, the city imposed a special property tax levy of 1.25 per cent a year for a decade for an economic development investment fund worth $110-million. Its focus was postsecondary education and knowledge industries, not manufacturing, as catalysts for growth.

"We needed to make a bold statement," Mr. Zehr says. "We had a number of older buildings and sites without buildings that could be ripe for employment lands."

The city invested $30-million to locate the University of Waterloo's $147-million school of pharmacy on a former eight-acre industrial site, purchased earlier by the city for $1, across from the Tannery. The city also put up $6.5-million to bring Wilfrid Laurier University's faculty of social work to a vacant school several blocks from the Tannery.

"The combination of those few things really got people's attention that something is happening here," Mr. Zehr says.

In 2005, picking up on city signals, Andrin Homes sold out residential lofts from a $40-million conversion of a former rubber plant, one block from the Tannery.

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The quickening pulse caught the attention of Cadan, which bought the Tannery for $10-million in 2007.

"The city's involvement with the university frankly gave us confidence that the whole area was about to change," Ms. Sherman says. Significantly, the Tannery is three blocks from a new transit hub that, by 2017, will bring a new regional light-rail service, Via Rail, GO Transit and buses under one roof.

In purchasing the building, a mix of storage and workshops since leather production ended in 1954, Cadan embarked on an environmental cleanup to convert 350,000 square feet to Class A office and retail.

Under a brownfields incentive program, Kitchener will reimburse the developer over a 10-year period, starting in 2013, for $891,000 in cleanup costs. In effect, the city funds the reimbursement from increases in property taxes tied to building upgrades.

"It's a good compromise," says brownfield co-ordinator Terry Boutilier. "The private sector gets help with costs of cleanup, and the public sector gets a cleaned-up property and an increased revenue stream."

Aside from the cleanup, Cadan's big challenge was to repurpose the building in the midst of a downturn. For months, the Cadan partners and architect Roland Rom Colthoff, a principal of Raw Design, walked the building to visualize its potential.

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"What a mess," Mr. Colthoff recalls. "It was literally a rabbit warren of corridors running everywhere. It was very difficult to navigate through the structure."

His solution was to prune extraneous features while protecting heritage aspects. "One of the keys was to open it up so that you would have this sweep across the site that recognizes the principal buildings," he says.

By 2008, Cadan settled on transforming the building as commercial space for high-tech tenants. That meant adding special features, such as abundant power for computer servers, showers and bike racks.

Executing the strategy entailed months of discussions with city officials. For its part, the city leased to Cadan temporary (for 10 years) parking spots to at nearby former works yard, easing on-site constraints.

"We did not always agree," Ms. Sherman says. "But we had a dialogue, which was far more important than anything else."

Through its investment fund, the city contributed $500,000 in seed money for a new digital media innovation hub created by Communitech, which represents 800 technology companies in Waterloo region.

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One of the first to move in to the Tannery last year, Communitech leases 44,000 square feet of space where entrepreneurs (including 57 start-ups), investors, students and professors collaborate on digital media.

With its high ceilings, brick walls and natural lighting, the Tannery is an appealing environment for creative minds, says Kevin Tuer, vice-president of digital media for Communitech. "We are not the first to prove it, but there is this affinity for high-tech to align with the old architecture in the older buildings."

Long overshadowed by twin-city Waterloo with the better-known postal code for technology, Kitchener looks to the Tannery and other industrial facelifts in the renamed "innovation district" to rebrand its blue-collar image with 21st century employers. Last year, search engine giant Google moved into a 34,000-square-foot space at the Tannery.

Two years ago, Ms. Sherman says, "people were not really open-minded to the idea of Kitchener and most wanted to be in Waterloo." Now, she adds, "people are seeking us out."

Special to The Globe and Mail

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