| By
Rick Peterson September 10 2008
©
Reprinted from The Vancouver Sun
September 10th. 2008
A
walk up Cambie Street these days
will tell you that in a short time
this area will be better than ever
for those businesses that survived,
or have just arrived. But, at what
cost?
A
Canadian Federation of Independent
Businesses survey in 2007 found
that more than 75% of businesses
on Cambie Street reported serious
decreases in sales and an average
loss of over $110,000. Most analysts
agree that more than 50 businesses
have closed. Scores of others have
been re-located, reduced or re-financed.
It’s
clear that doing business on Cambie
Street for the past two years has
been a death sentence for many.
Through no fault of their own, many
small and medium-sized businesses
bore a huge and stunningly disproportionate
share of the cost of an infrastructure
project that stands to benefit all
of us in the region.
Not
surprisingly, many merchants are
seeking redress. The matter is currently
before the courts in the form of
a $20 million claim for compensation,
which, if successful, is loaded
with potentially negative consequences
in the form of across-the-board,
higher costs down the road for any
proposed capital infrastructure
project here in British Columbia.
It’s
in everyone’s interests to
come up with a co-operative solution.
One
possible solution may be the launch
of a vehicle – let’s
call it The
Canada Line Seed Fund
- to provide a hand-up, not a hand-out
nor compensation, to targeted businesses
on Cambie Street and elsewhere along
the Canada Line corridor.
The
CLSF would allocate funds to new,
existing, or failed businesses that
wish to re-start, based on a number
of criteria and factors. Applicants
would present business plans with
milestones and objectives showing
how they would use any funds to
ramp up their business, market their
goods and services in the new Cambie
environment, invest in capital or
equipment or people, or implement
environmentally friendly best practices.
Businesses
that could demonstrate, through
audited financials, they were impacted
by the Canada Line construction,
would obviously merit special consideration,
but any funds coming to them are
not lump sum cash payments, nor
are they compensation that goes
straight into the bank accounts
of the merchants. Funding would
go to direct business investments
that will spin off dividends in
the future for the merchants, for
the public, and for the tax man
at all three levels of government.
So,
what’s the cost, and who will
pay for this?
Let’s
take the Cambie merchants’
compensation claim for $20 million
as a high-water funding benchmark.
At that level of funding, the CLSF
would represent just over one per
cent of the capital cost of the
$1.9 billion project – in
other words, a rounding error. Based
on the business plans presented
to the CLSF, the amount could be
considerably less.
The
Canada Line project is a public-private
partnership. CLSF funding could
objectively be in line with financial
commitments to the PPP, which are
as follows, according to the Canada
Line website (www.canadaline.com)
(figures not exact due to rounding):
•
InTransitBC 35%
• Government of Canada
22%
• Translink 17%
• Vancouver Airport Authority
13%
• Province of BC 12%
• City of Vancouver 1%
Total: 100%
InTransitBC
represents the private sector entity
in the Canada Line PPP. It is led
by Canadian giant SNC-Lavalin, one
of the world’s leading engineering
firms. In exchange for it’s
35 per cent investment, SNC-Lavalin
expects to make a profit in excess
of their cost of capital over the
course of the 35-year contract they
have to operate the Canada Line.
So, it seems fitting that the biggest
source of support to help re-launch
Cambie Street businesses would be
public company that produced $6.7
billion in revenue in 2007, earned
$153 million in net income, and
currently is sitting with just over
$1 billion in cash on its balance
sheet.
The
Canada Line Seed Fund
is a win-win solution. It represents
a fair, equitable and reasonable
investment in the future of businesses
along the Canada Line. It’s
a model that can help protect the
integrity of other infrastructure
projects that this province needs
to remain competitive in a global
marketplace.
All that’s needed is the political
will to bring all the stakeholders
to the table and hammer out a deal.
Elected officials at all three levels
of government, owe it to these small
businesses to at least give it a
try.
©
Reprinted from The Vancouver Sun
September 10th. 2008
Rick Peterson is president of Peterson
Capital, a Vancouver-based firm
that assists in financing early-stage
public companies in the Canadian
capital markets. He was a candidate
for the BC Liberal nomination in
Vancouver-Fairview.
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