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Nov 1,2003 - Now News

 

By Ron Devitt - Staff Reporter - Now News

The Smart Choices Society got a financial boost from the two municipal partners that make up the founding members of the organization.

On Tuesday, Coquitlam city council passed an in-camera resolution to endorse the society's direction business plan as presented by the Smart Choices board of directors; to endorse continued city involvement and support of the society and to approve bridge financing of $250,000 in 2004 and $200,000 in 2005.

In March 2001, Port Moody, Coquitlam, School District 43 and Douglas College entered into an agreement with the Smart Choices Society to improve online business, community and civic services. The partners signed a $4.6-million contribution agreement with Industry Canada.

The society returned to the partners this year, asking for bridge financing to get its online arm, citysoup.ca, fully operational.

Like Port Moody's a week earlier, Coquitlam's passing of the bridge financing resolution was subject to the society meeting certain conditions.

The conditions are: a non-interest-bearing loan on the bridge financing, to be re-paid over two years, commencing in 2006; a change to the membership criteria, to include additional members to the society for every $100,000 received from the existing funding pattern; that $40,000 of the $290,000 go toward a volunteer co-ordinator position with Smart Choices; and that "equitable terms of financing" exist between contributing partners.

Coquitlam Mayor Jon Kingsbury said in an interview that while there may be conditions to the city lending the money, the conditions have not been placed there to shackle the society.

"No heavy strings here," Kingsbury told The NOW Tuesday. "We gave a vote of confidence to the Smart Choices board. We're confident in Smart Choices and we're comfortable with it. We think they're doing a great job."

Last week, Port Moody city council passed a resolution to provide bridge financing to the society in the amount of $100,000 in 2004 and $60,000 in 2005, subject to eight conditions - and only after lengthy debate.

Some of Port Moody's conditions include: the recruitment of a new chief executive officer with entrepreneurial and business experience; a review of the draft directional business plan by the new CEO; and submission of an action-orientated business plan that will achieve sustainability and a commitment by the society to repay the founding partners - with interest - once sustainability is achieved.

Port Moody has sent the resolution to its finance committee, which will review the financial commitment.

Bill Brown, Smart Choices chairman, said in a news release that he was pleased with the decision by both city councils to provide bridge financing to the society.

"It is a visionary and empowering decision that the City of Port Moody and the City of Coquitlam have made," Brown said. "Both councils have understood and embraced the future and will continue to benefit from the opportunities and rewards the Smart Choices initiative has already begun to deliver."

Port Moody made its decision in a special meeting, while Coquitlam held its meeting behind closed doors.

Port Moody's debate centred around the sustainability of the draft business plan set out by the Smart Choices Society.

The society's current draft business plan calls for a net deficit of $296,000 in its first year of operation, a $198,000 deficit in year two, revenue of $404,527 in the third year and revenue of $607,283 in the fourth.

However, those figures did not stop Port Moody city council from having reservations about handing over more money to the society.

"I certainly support the concept, but I'm wondering if the projected revenues are realistic," Coun. Cynthia van Ginkel said at the meeting. "I think the business plan is very staff-heavy for a society of that nature."

Coun. Bob Brown said the money put up by the city is the cost of getting into the electronic age.

Gaetan Royer, community services manager and a Port Moody representative on the Smart Choices board, said the user-friendly e-community, the business portal and the Innovation and Broadcast centres are ideal tools for selling the city's retail, business and real-estate opportunities.

"You can't refer to models in other communities, we're inventing here," Royer said.

Coun. Gerry Nuttall, however, voted against providing the bridge financing.

"I have really serious concerns about them being able to do what they say they're going to do with the money they want," Nuttall said. "They had $13 million to complete a finished product and after three years they came back and said they couldn't do it."

Nuttall, along with other councillors, wondered aloud why the society returned to its founding partners for more money, instead of seeking it from a financial institution.

"I find it difficult to believe that someone with a $13-million project can't get bank funding," Nuttall said. "I'd like to see them go to a financial institution to get funding, rather than the municipalities."

Royer responded by saying: "The time has passed for the society to do that. It's a little late for the society to go back and do a business plan. There is an incredible amount of intellectual assets. Can you borrow against it? Probably not."

"This is taxpayers' money and we should have higher standards than a bank when we're dealing with taxpayers' money," Coun. Karen Rockwell said. "My concern is, why was there not a move by the society to go get venture capital - because they thought it was easier to go to the public purse?"

Royer defended the board's attempts to get the funding needed to keep the initiative moving forward.

"I think from a board's perspective, we have left no stone unturned in terms of trying to find financing for this project," Royer said.

"The two municipalities made a huge leap of faith two years ago, and now we're asking you to make a smaller one."

Only Couns. Meghan Lahti and Bob Brown were on the council that made the decision to jump on board with Smart Choices in 2001.

"When we made the decision to go ahead with being a part of this project, I did so with a great deal of apprehension, because of these very issues - money," Lahti said. "Now we're being told we don't really have an option."

Royer and Mayor Joe Trasolini asked that council be patient.

"I think we're on the verge of having tremendous assets being brought to us," Royer said.

Councillors were also concerned that the draft plan's focus to sell to other cities might leave the society in a catch-22 position.

"Selling to other cities as a way to sustainability is showing other cities that the project is not sustainable on its own," Royer said, echoing council's concerns.

Royer said the society is just over a month away from finding a CEO.

Jennifer Wilkie, acting Smart Choices executive director, said she believes council made a lot of financial assumptions in the meeting, but doesn't fault them for doing due diligence.

"I think the due diligence they're doing is prudent as they go through the business plan," Wilkie said.

Wilkie said she believes the predicted revenues for years three and four are realistic and attainable.

"I feel fully confident, with both council's support and the community's support, that the sustainability of citysoup.ca will be there and the numbers (revenue) will be there," Wilkie said.

According to society statistics, the citysoup.ca web page received 53,298 visits between June 6 and Oct. 6 of this year, and the number of pages opened during that time exceeded one million.

Society spokeswoman Hilary Horlock said the average visit lasted 21 minutes - four times longer than the Internet standard - and on average, each visitor looked at 20 pages within the site.

"These statistics indicate an exceptional performance for a website in its fifth month of operation, within a target audience of approximately 140,000 people or 25,000 households," Horlock said.

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