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This article was published 27/6/2018 (603 days ago), so information in it may no longer be current.
Sightings of Peg City Car Co-op’s fleet of Japanese sub-compacts with the circular logo on the door have started to become a more common occurrence as the fleet has been steadily growing since launching in 2011 with three vehicles.
Now, there’s a total of 26 vehicles, including a pickup truck and a couple of family vans. A cargo van is on the way.
But management and the board believe there is plenty more potential members out there. With that in mind, the co-op is now in the process of raising $200,000 through the province’s Community Enterprise Development (CED) tax credit program to invest in more marketing, additional vehicles and a technology upgrade.
The co-op has a little more than 1,000 members, and although operations manager Philip Mikulec acknowledged that the number is below prior forecasts, all concerned believe there is plenty of upside potential.
"This year, we started to invest additional money in marketing and it has paid off in spades," he said. "During the past nine months, we’ve had our fastest growth in user base in the history of the co-op. There’s been 200 new people with fobs in their hands since October."
The co-op’s new forecast is calling for a few years of 30-plus per cent growth and to hit 50 vehicles by 2021.
"We’re confident in the future," board president Sean Madden said. "We are definitely on track to sustainability. That has always been our primary goal."
The cautious and conservative growth pattern will continue. But with additional capital now available — along with seven years of operational experience — there exists a greater comfort level that allows the co-op to pursue the kind of returns a larger marketing spend might yield.
In the meantime, partnerships with real estate developers, as well as support from the city’s planning department, has opened up new revenue streams and new opportunities for membership growth.
For instance, an agreement with the board of the new Old Grace Housing Co-op has added two new Peg City Co-op cars in the Wolseley neighbourhood. It is a financial arrangement that benefits Peg City and the developer, which does not need to build as many parking stalls as it might otherwise have had to in order to meet its city zoning requirements.
Peg City is looking to enter into more of those kinds of partnerships with developers — especially those working on infill sites.
"The residents get access to the cars and we have signed up more Wolseley members," Mikulec said. "All of our vehicle additions have been in neighbourhoods we’ve had cars in. (The Old Grace cars are officially the first cars in Wolseley, but there have been cars located in West Broadway). So we see no shortage of potential at this point in time."
The new capital campaign through the CED tax credit program has been well received, with about $75,000 committed since the soft launch a week ago.
It is the second time the co-op has used the CED.
The program features a 45 per cent provincial tax credit. There is a mandated three-year hold period and then the co-op is committed to re-purchase the shares in four annual payments. So while there is no capital appreciation in the traditional sense — and no guarantee of payback — investors do get the generous tax credit and some comfort that it has been successful in honouring its payback in the past.
From September 2012 to December 2015, Peg City Car Co-op offered three rounds of investment share purchases for a total of $200,000. The first round generated $66,500, the second brought in $46,000 and the third round sold out the approved limit with the sale of the remaining $87,500.
The first round will be completely repaid next year, the second round has started the repayment process and the third round will start soon.
"We have demonstrated in the past we can do this," Madden said. "This is not our first drive. In the past, we have used it as an opportunity to expand and it has been successful."
In the early years, it used the new capital to double its fleet from four to eight vehicles.
"There’s no reason why we can’t continue to do that based on how things have gone," he said. "In the last year, we’ve had a great uptick in membership."
Martin Cash has been writing a column and business news at the Free Press since 1989. Over those years he’s written through a number of business cycles and the rise and fall (and rise) in fortunes of many local businesses.
Read full biography