Report to/Rapport au :

Corporate Services and Economic Development Committee

Comité des services organisationnels et du développement économique

and Council / et au Conseil

4 May 2004 / le 4 mai 2004

Submitted by/Soumis par : Greg Geddes, Acting General Manager/Directeur général par intérim, Corporate Services/Services généraux

Contact Person/Personne ressource : Douglas H. Mccaslin, Manager, Real Estate Services

Real Property Asset Management/Gestion des actifs et des biens immobiliers

(613) 580-2424 x22595, douglas.mccaslin@ottawa.ca

Ref N°: ACS2004-CRS-RPR-0016

SUBJECT:	CARP AIRPORT - BUSINESS PLAN

OBJET :	AÉROPORT DE CARP – PLAN D’ACTIVITÉS

REPORT RECOMMENDATIONS

That the Corporate Services and Economic Development Committee recommend Council approve:

1. An Option to Purchase Agreement between the City and West Capital Developments (WCD) to provide for the transfer of the Carp Airport in accordance with the provisions of a Municipal Capital Facility Agreement with WCD, an Airport Management Agreement with WCD and related Lease Agreements for tenants at the Carp Airport as outlined in this report and the conditions set out in Annexes “A” & “B”.

2. The Delegation of authority to the General Manager of Corporate Services to finalize and execute the Option to Purchase Agreement with West Capital Developments (WCD) as outlined in this report and the conditions set out in Annexes “A” & “B”.

3. Authorization for the General Manager of Corporate Services to execute a surrender of the Head Lease with the Carp Airport Authority by 31 May 2004 whereby the City assumes direct operational responsibility for the Carp Airport as of 1 June 2004 and with the Carp Airport Authority being retained as an Advisory Board as outlined in this report.

4. The Delegation of Authority to the General Manager of Corporate Services to finalize and execute an Airport Management Agreement with WCD to have WCD assist the City in the management of the Carp Airport for a one (1) year term from 1 June 2004 to 31 May 2005, subject to the Option to Purchase Agreement with WCD being executed by 31 May 2004, as set out in this report.

RECOMMANDATIONS DU RAPPORT

Que le Comité des services organisationnels et du développement économique recommande au Conseil d’approuver :

1. une convention d’option d’achat entre la Ville et West Capital Developments (WCD) visant à assurer la cession de l’aéroport de Carp conformément aux dispositions d’une convention sur des immobilisations municipales et d’une convention de gestion de l’aéroport conclues avec WCD et de conventions de location connexes conclues avec des locataires d’installations de l’aéroport de Carp, comme il est décrit dans le présent rapport et les conditions énoncées aux annexes A et B;

2. l’habilitation du directeur général, Services généraux, à finaliser et à conclure avec WCD la convention d’option d’achat, comme il est décrit dans le présent rapport et les conditions énoncées aux annexes A et B;

3. l’autorisation du directeur général, Services généraux, à signer un acte de résignation du bail principal conclu avec la Carp Airport Authority, avant le 31 mai 2004, aux termes duquel la Ville assumera la responsabilité opérationnelle directe de l’aéroport de Carp à compter du 1^er juin 2004, après quoi la Carp Airport Authority fera fonction de conseil consultatif comme le décrit le présent rapport;

4. l’habilitation du directeur général, Services généraux, à finaliser et à conclure avec WCD une convention de gestion de l’aéroport avant le 31 mai 2004 aux termes de laquelle WCD collaborera avec la Ville à la gestion de l’aéroport de Carp durant un (1) an, du 1^er juin 2004 au 31 mai 2005, sous réserve de la conclusion de la convention d’option d’achat avec WCD avant le 31 mai 2004, comme il est décrit dans le présent rapport et les conditions énoncées à l’annexe A.

BACKGROUND

Existing Agreements with Transport Canada and Nav Canada

The ownership of the Carp Airport was transferred, by Agreement, from Transport Canada to the RMOC on 14 March 1997 and subsequently to the City of Ottawa when amalgamation took place on 1 January 2001.

Under the Agreement with Transport Canada, the City is required to operate the airport until 14 March 2007. Prior to that time, the City can only dispose of lands that are surplus to the airport’s operational requirements. Any sale proceeds must be directed to a separate account for airport operations and only spent for that purpose prior to 14 March 2007.

However, after this date the City may sell the entire airport property, which could conceivably be with the airport closed, and retain the proceeds of the sale and any unspent funds in the operating account. This means that the City has, in effect, made a commitment to operate the airport only until 14 March 2007 with the result that tenants at the airport have not been able to secure long-term leases for their facilities.

There is a further significant constraint on development at the Airport because of the provisions of the Aviation Services and Facilities Agreement (ASFA) with Nav Canada, which forms an integral part of the Agreement with Transport Canada.

Carp Airport Authority

The Carp Airport Authority (a non-profit Corporation) has operated the airport based on annual leases from the City of Ottawa. The last annual lease expired on 31 December 2003 and the Airport Authority’s tenancy is now on a month-to-month basis.

The Airport Authority has a number of sub-tenants who have built facilities on land leased from the Authority. These sub-tenants pay rent based on a formula related to the area of land leased and an annual cost adjustment is applied. They also pay an annual Airport Maintenance Charge, which is also shared amongst the sub-tenants based on pro-rated areas. However, only 75% of the maintenance costs have traditionally been recovered under a formula that was established during the era that Transport Canada owned and operated the airport.

As a result, the airport has operated with annual operating deficits that have required the City to subsidize the operations since the acquisition from Transport Canada with a direct grant each year. While the grant amount has been reduced to $20,000 in recent years, the City still provides a significant amount of in-kind services including, the supply of vehicles, repairs to equipment, etc. and also covers the cost of the airport manager position. In 2003 the cost to the City in support of the Carp Airport operations totaled approximately $100,000. The City also spent approximately another $50,000 in minor capital improvements. Based on the Airport Authority’s draft budget for 2004, the total cost to the City with respect to the airport's operations will be at least $75,000, not including an allowance for major maintenance/minor capital items.

Since the Airport Manager is a contract employee of the City, the City appoints the majority of the members to the Airport Authority's Board, and the City has been underwriting the cost of operating and maintaining the airport, the Carp Airport Authority is operating more as an agent of the City rather than as a tenant but the City does not have, nor can it exercise, control over the airport operations under the Head Lease arrangement to the same degree that it normally does for a local board of the municipality.

Expressions of Interest Process

In order to move the Carp Airport towards independency and self-sufficiency, the City issued a Request for Expressions of Interest (RFEOI) in 2002 with respect to the future planning, development, operation and ownership of the airport. The RFEOI conditions required the airport to be maintained only until 14 March 2007 and respondents were allowed to propose other development concepts that did not include an airport after 14 March 2007 on the condition that the proposed development would provide for an enhanced economic generator on this site.

The RFEOI resulted in the City receiving four (4) Expressions of Interest (EOI’s) but only two (2) were comprehensive responses, those being from the Carp Airport Authority (CAA) and by 151497 Ontario Inc. carrying on business as West Capital Developments (WCD).

The proposal from the CAA was based on the City continuing to own the airport and to support any operating losses and provide services in-kind until such time that the airport becomes self-sufficient. The proposal also called for the City to fund the development of the Airport Master Plan and then for the City to make a long-term commitment to the CAA in order for them to embark on the self-sufficiency plan.

WCD provided the only response that set out a comprehensive project to own, manage and develop the Carp Airport as a private sector corporation. WCD indicated they would undertake all the necessary planning studies technical/investigations at its expense to develop a Master Plan, Servicing Plan, Marketing Plan and Investment Plan.

It was clear from the EOI process that the development and economic potential for the Carp Airport property centres on maintaining the airport facilities as a major amenity. The property would have little development potential without the airport facilities. The Official Plan designations essentially make an exception for the airport facility and associated economic generators, which might otherwise not have been the case if the airport had not previously existed.

Carp Airport Business Plan

As a result, City Council granted approval, on 14 May 2003 (Report # ACS2003-CRS-RPR-0039), for WCD to proceed with developing a Business Plan based on a submission deadline of 1 November 2003, and conditions that would ensure the City’s planning and economic development objectives, as set out in the Official Plan, could be met and also, on conditions that would still allow the Airport Authority to move towards independency and self-sufficiency should the City not proceed to approve the WCD Business Plan. The City and WCD then entered into an agreement for the preparation of the Business Plan.

At the same time, Council agreed to consent to a new 10-year lease for First Air, a sub-tenant of the CAA, and considered it equitable to extend the same opportunity for a 10 year lease under the same terms to all other existing sub-tenants at the airport whose tenancies were in good standings under the terms of their specific leases. These lease provisions still stipulate that there is no guarantee that the airport facilities may remain in operation after 14 March 2007.

In addition, the Airport Authority had requested approval from the City to construct a 20 bay T-Hangar, in order to allow the Airport Authority to keep moving forward to self sufficiency, while waiting to see if WCD would be able to develop a viable business plan that meets the City’s requirements. Council approved this request and authorized the construction of the 20 bay T -hangar and the provision of a guarantee for a $200,000 loan.

WCD completed its Business Plan and delivered it, under confidential cover, to the City on 31 October 2003. The WCD Business Plan provides for a self-contained aviation community on the approximately 967-acre Carp Airport property, as shown on the Carp Airport Land Use Plan attached as part of Annex “B” to this report, consisting of the following elements:

Core Airport Area, as shown on the Carp Airport Core Area Plan attached as part of Annex “B” to this report, on approximately 385 acres which allows for a widening and an extension of the runway to 6000 ft. with provision for instrument controlled (all-weather) landings, additional airport support and service facilities, and expanded test-bed operations and for the retention and expansion of existing airport tenants;

Aerospace Business Park on approximately 181 acres which will provide for over 1,000,000 sq. ft. of industrial and office space to be promoted and developed for aerospace related businesses on the basis that Ottawa is the centre for aerospace research and regulation in Canada, and is a major centre for technology development in North America;

Airport Accessory Residential Community on approximately 401 acres which will provide for 150 estate homes with attached aircraft hangars and 600 other types of homes ranging from condos to single family dwellings with communal hangars for airport users and business park employees.

Staff from Corporate Services, Development Services, and Transportation Utilities and Public Works Departments subsequently reviewed the plan and determined that the WCD Business Plan, as submitted, was more ambitious than the concept plan submitted with its EOI and, as a result, would require amendments to the City's Official Plan and Zoning By-law to implement.

Since Zoning/OP amendments are not consistent with the conditions approved by City Council, on 14 May 2003, nor in accordance with the provisions of the resulting Business Plan Agreement between the City & WCD, WCD was aware that its Business Plan did not fully comply but indicated, in writing, that the Land Use and Airport Master Plans could not be modified to comply with all existing planning regulations without jeopardizing the financial viability of the project.

However, the City's review of WCD's Business Plan also indicated that the WCD vision for a fully contained aviation community would appear to have significant economic development potential and benefit for the City, Carp Village, the Carp Road Corridor, and the General Aviation Community.

On this basis, staff and WCD representatives negotiated the possibility of an option agreement that would allow WCD to go ahead with the development and, during these negotiations, established 23 conditions that might form the basis for an option agreement. One of the 23 conditions included is for WCD to underwrite the operating and maintenance costs for the airport during the option period, up to an amount of $150,000 which was established from the CAA’s draft 2004 budget, as compensation for the option being granted by the City if Council ultimately approves executing an option agreement with WCD.

Staff also continued to work towards implementing arrangements that would still provide for operational changes and development at the Airport, to allow the airport operations to move towards independency and self-sufficiency, if for any reason the WCD Business Plan does not proceed or is not fully implemented. Therefore, staff has continued discussions on such arrangements with the CAA concurrently with the negotiations with WCD for a modified business plan and option agreement.

The arrangements discussed with the CAA call for the City to have more direct control of the day-to-day operations of the airport in the short-term until Council decides the final direction for the long-term. This is to allow the City to take advantage of WCD's agreement to underwrite the operating and maintenance costs for the airport during the option period if Council ultimately approves executing an option agreement with WCD, and for the City to assume direct control over all activities at the airport which are related to the City meeting its obligations under the provisions of the proposed option agreement and other related agreements.

Proposed Option to Purchase Agreement

As a result, City Council, on 25 February 2004 (Report # ACS2004-CRS-RPR-0020), did not approve the Business Plan for the Carp Airport, as submitted by WCD on 31 October 2003 and instead, directed staff to finalize negotiations with WCD with respect to an option agreement to purchase the Carp Airport property based on modifications, as necessary, to the Business Plan.

Council also directed staff to bring forward a report with recommendations regarding an option Agreement with WCD and with respect to the long and short-term arrangements with the Carp Airport Authority for operating and managing the airport, should the option Agreement with WCD not proceed or should the WCD Business Plan not be fully implemented for whatever reason, for consideration by the Corporate Services and Economic Development Committee and Council in April 2004.

Following the Council directives of 25 February 2004, intensive discussions and negotiations with WCD have taken place and resulted in a memorandum of understanding on planning and infrastructure approval requirements and process being finalized between WCD and the Planning and Development Department on 14 April 2004, attached to this report as Annex “B”, and WCD agreeing, in writing on 22 April 2004, to the provisions for an option to purchase agreement, airport management agreement, Municipal Capital Facility Agreement, and tenant lease agreements regarding these matters as set out in Annex “A” of this report.

Status of Carp Airport Authority Operations

Subsequent to the decisions by the Council on 14 May 2003, the CAA has moved forward with a number of initiatives, as approved by Council at that time, geared to make the operations of the airport more financially self-sufficient should the WCD business plan not be approved, or, for any other reason, not implemented.

The first 20-bay T-Hangar was completed and occupied in 2002 and the CAA sold 17 units and leased 3 units in the second 20-bay T-Hangar, which was constructed and fully occupied by the end of 2003. Ground leases have now been provided for both T-Hangars that no longer include a provision whereby tenants are only responsible for 75% of the airport operating costs

A new lease agreement dated 9 February 2004 was executed between the CAA and First Air with the City included as a consenting party. The First Air lease includes for an additional leased area of approximately 2 acres. Similar to the T-Hangar leases, this lease no longer includes a provision whereby tenants are only responsible for 75% of the airport operating costs.

Draft lease agreements have been prepared for the other sub-tenants of the CAA using the First Air lease as the model for these agreements and taking into account the specific circumstances of each individual tenancy.

The 2004 draft budget prepared by the CAA now includes, in addition to anticipated cost escalations for goods and services, provision for costs associated with goods and services formerly provided on an in-kind basis by the City and eliminates a deduction applied to administrative costs that had been previously made before the 75% formula was applied to calculate the Airport Maintenance Charge for tenants. This has resulted in an approximately 20% increase in the Airport Maintenance Charge rate for 2004 over the rate for 2003.

Since the CAA submitted its EOI in 2002, the two 20-bay T-Hangars are now fully occupied. The CAA has been able to lease additional property to First Air, and Helicopter Transport Canada is also looking to lease additional property at the airport in 2004 to expand its facilities provided that it can obtain terms for a new lease that will permit the financing of this additional development.

Based on the current ground lease rents and Airport Maintenance Charge, the CAA could operate annually on a break even basis by leasing approximately an additional 6.5 acres on the same basis as for the other tenants and by adjusting the budget only for annual cost escalation for goods and services. However, this would not provide adequate funding capacity to undertake capital or life cycle improvements. Further leasing could provide for a capital works or life-cycle fund to be established. In any event, it appears that the CAA is now within striking distance of its goal to establish the airport on a self-sustaining basis by March 2007.

The CAA business plan is based upon a very modest increase in growth of the economic generator compared to that proposed by the WCD business plan. The CAA has recognized the potential of the WCD business plan and has cooperated with staff in working towards arrangements with the CAA that would allow the City to pursue the WCD plan while providing for the airport to move forward on an independent and self-sustaining basis if WCD does not proceed with the project for any reason. In this regard, the CAA Board has indicated that the CAA is willing to surrender its Head Lease and cooperate with the City in the provision of services at the airport and to continue to have the Board act on advisory basis during the proposed option period. The Board is scheduled to consider, and is expected to pass, a motion to this effect on 29 April 2004.

DISCUSSION

The WCD Business Plan is a bold, innovative strategy to create a sustainable, major General Aviation facility within the boundaries of Ottawa. The plan involves high investment and risk on the part of WCD, but, if successful, WCD will have created not only a unique and stable focal point for General Aviation in the Ottawa region but also substantial economic growth for both the local community and the entire City.

The recommendations of this report provide the opportunity for WCD to pursue its business plan for implementing a self-contained “aviation community” and for the City to receive the potential economic benefit of this special project.

The proposed provisions for the option agreement, airport arrangement, Municipal Capital Facility Agreement (MCFA) and land lease extension agreement, as set out in Annex “A, and for the planning and infrastructure approvals process, as set out in Annex “B”, are consistent with the directives established by Council on 25 February 2004, namely as follows:

a. Ensure the proposed development will be compatible with the City’s planning policies, and compatible with the Community Plans for the Carp Village and Carp Road Corridor;

b. Require WCD to fully fund all approval and development costs associated with implementing the modified Business Plan;

c. Eliminate any financial risk for the City; and

d. Ensure that the existing airport operations and tenancies will not be adversely affected should the WCD Business Plan not be fully implemented for whatever reason.

The proposed provisions of the MCFA, as set out in section #12 of Annex “A”, are compatible with the existing provisions of the agreements with Transport Canada for the Carp Airport and should facilitate the consent and approvals process with Transport Canada and Nav Canada for implementing the WCD Business Plan.

The MCFA will provide the authority for the transfer of the Carp Airport to WCD, at the fair market value as of 14 May 2004. The specific provisions of the MCFA will ensure that the City retains the right to approve the operational arrangements for the Core Airport Area including the right to repurchase this part of the airport, if at any time, WCD becomes in default of its obligations under the terms and conditions of the MCFA. The MCFA will also require WCD to have all funding in place for the first phase of the development, which funding is now estimated to be in excess of $20M, as a specific condition for the actual transfer of the Carp Airport by the City to WCD. The first phase must also include for undertaking the proposed improvements to the airport runways and associated operational equipment set out by WCD.

The surrender of the Head lease by the CAA and the assumption by the City of the CAA’s rights and obligations under that agreement, as provided for in recommendation #3 of this report, will automatically continue the existing lease arrangements for the current sub-tenants of the CAA, except that these sub-tenants will now become direct tenants of the City. A termination of the CAA Head Lease would otherwise also terminate the lease arrangements with the CAA’s sub-tenants.

In addition, the provisions for lease extensions for these tenants, as set out in section #10 of Annex “A”, allow for a 10-year lease with an option to renew for a further 10-years on an airport that will continue to operate after 14 March 2007 regardless of ownership of the property at that time. The arrangements provide for relocation of these tenants for airport development purposes and, upon relocation, for quiet enjoyment for the lease and renewal terms.

The relocation provisions also provide for the cost of any such relocation, required and undertaken before 14 March 2007, to be borne by the landlord and, after 14 March 2007, to be borne by the tenant. This is considered fair to existing tenants who, while on a month-to-month basis, only have a reasonable expectation that the airport would continue to operate until 14 March 2007. In providing a long term lease arrangement for these tenants and by undertaking to operate the airport after 14 March 2007 as set out in this report, the City will be offering substantial additional benefit, over a month to month arrangement, to retain the current tenants of the airport and, therefore, should not, in providing this extra benefit, find itself, or make its successors, obliged to incur further cost obligations for tenant relocations after 14 March 2007 that may be needed to allow for airport development or improvement.

The airport management arrangements, as set out in section #11 of Annex “A”, while providing for direct control of all airport operations by the City during the option period, still allow for the retention of the existing staff and contract resources and for the CAA Board to remain in an advisory capacity to the City. These provisions have been made to ensure that these resources will continue to be available to the City if at any time WCD does not proceed with the project. The proposed lease surrender arrangements with the CAA will reflect and be consistent with the provisions set out in section #11 of Annex “A”.

The airport management arrangements set out in section #11 of Annex “A” also provide for WCD to proceed with the planning and marketing for a third T-Hangar and for attracting other new tenants to the airport during the option period. These arrangements are consistent with the CAA’s objectives and current business plan direction for attracting new tenancies at the earliest opportunity to help eliminate the current operating deficit.

ENVIRONMENTAL IMPLICATIONS

The development planning for the Carp Airport will evaluate and address all environmental related issues associated with existing and proposed development on this property. During the option period, the City and WCD will also carry out Environmental Site Assessment investigations as required to complete the due diligence requirements of both parties in finalizing a Municipal Capital Facility Agreement for the Carp Airport.

RURAL IMPLICATIONS

The recommendations in this report are based on ensuring that any proposed development supports the relevant Official Plan policies for the rural area and the objectives of the rural community, including protecting and adding to the employment base in this location, and is compatible with, and supports, the Community Design Plans being evolved for the Village of Carp and the Carp Road Corridor.

CONSULTATION

The recommendations in this report are based on the results of negotiations and discussion with the WCD and the CAA. The proposed provisions for the option agreement, airport management agreement, Municipal Capital Facility Agreement, and tenant lease agreements, as set out in Annex “A” of this report, were agreed to in writing by WCD on 22 April 2004.

Following the Council directive of 25 February 2004, WCD consulted extensively with the Planning and Infrastructure Approvals Branch of the Planning and Development Department regarding planning and infrastructure approvals associated with implementing WCD’s land use plan for the Carp Airport and the results were then recorded in a memorandum of understanding dated 14 April 2004, which is attached to this report as Annex “B”.

Some of the CAA’s sub-tenants made a presentation to the Corporate Services and Economic Development Committee, on 17 February 2004, when Report #ACS2004-CRS-RPR-0020 was being considered. The concerns of these tenants have been considered and addressed where possible in preparing the recommendations of this report and negotiating the provisions for the agreements with WCD set out in Annex “A”.

The Real Estate Services Division has also continued discussions with the CAA regarding the operation of the airport and the role of the CAA and based on understanding from these discussions the Board of Directors of the CAA has been requested by staff to pass a motion, at its scheduled 29 April 2004 meeting, to surrender the Head Lease to the City as of 31 May 2004.

FINANCIAL IMPLICATIONS

Approval of the recommendations in this report will allow staff to finalize and execute an option agreement for the Carp Airport that will result in WCD underwriting any operating deficit for the airport in 2004 and the first five months of 2005 to a total amount of $150,000. Under the provisions of the agreements with Transport Canada these funds must be placed into an account dedicated for Carp Airport use.

Should WCD subsequently be successful in meeting the terms and conditions of the option agreement and complete the purchase, it will pay the current market value of the property to the City with the payments made by WCD during the option period being credited to the purchase price. WCD will then invest over $52M in upgrades to the airport and servicing for the property, over a 10-year period, with over $20M of this being expended in Phase 1 of the project to fund the airport runway improvements and extend trunk services from the Village of Carp to the airport.

SUPPORTING DOCUMENTATION

Annex 'A' - Provisions of Proposed Option Agreement with WCD

Annex 'B' -14 April 2004 Memorandum of Understanding - Planning and Infrastructure Approvals

DISPOSITION

The Real Estate Services Division and Legal Services Branch of the Corporate Services Development Department will facilitate and coordinate the finalization and execution of the option to purchase agreement with WCD, the Head Lease surrender agreement with the CAA, and any lease extension agreements with existing tenants at the airport. The Real Estate Services Division will obtain the real estate appraisals required to establish the market value of the property and upon agreement by WCD as to the value will apply to Transport Canada for all consents and approvals needed under the provisions of the option agreement.

Upon execution of the option agreement, if WCD exercises its option, WCD will, in consultation with the Planning and Development Department, prepare the terms and reference for all studies, set out in and required, by the provisions of Annex “B” of this report. WCD will also be responsible, solely at its cost, to make application for all planning and infrastructure approvals for review and processing by the Planning and Development Department.

ANNEX A

PROVISIONS OF PROPOSED OPTION AGREEMENT

BETWEEN

WEST CAPITAL DEVELOPMENTS (WCD)

AND

THE CITY OF OTTAWA (THE CITY)

1. The City will grant to WCD an irrevocable option to purchase the Carp Airport under the provisions of a Municipal Capital Facility Agreement on the terms and conditions as follows:

(a) The term of the option will be from the 1^st day of June 2004 to the 31^st day of May 2005;

(b) The option term shall be extended, at WCD’s request, regarding the Core Airport Area until the 14^th day of March 2007 in the event Transport Canada does not consent to the City assigning its interests in the agreements with Transport Canada for the airport to WCD and WCD wishes to exercise the option with respect to the Aerospace Business Park and Accessory Residential Community portions of the Carp Airport;

(c) The option term may be extended, at WCD’s request, to accommodate any period required to resolve any appeal related to planning and infrastructure approvals for the project;

(d) Any request by the Purchaser for an extension of the option term shall be delivered in writing no later than sixty (60) days before the option term expires;

(e) WCD shall pay to the City a total amount of One Hundred Fifty Thousand ($150,000) Dollars for the option to be paid as follows:

(i) Within five (5) business days of executing the option agreement, WCD shall pay to the City Fifty Thousand ($50,000.00) Dollars and make additional payments, as required by the City, from time to time, to offset any operating cost deficits that occur for operating the airport during the period from the 1^st day of January 2004 to the 31^st day of May 2005, up to a total amount of One Hundred Thousand ($100,000.00) Dollars and provide to the City an irrevocable letter of credit or a similar financial guarantee in the amount of One Hundred Thousand ($100,000.00) Dollars and in a form satisfactory to the General Manager of Corporate Services with respect to WCD’s obligation for these payments;

(ii) In the event of an extension of the term of the option to accommodate an appeal period for planning and infrastructure approvals, WCD shall pay an amount equal to Three Hundred ($300.00) Dollars for each day that the term is extended beyond the 31^st day of August 2005;

(iii)All payments made by WCD for the option term, and any further amounts paid by WCD as consideration for extending the option term, shall be non-refundable, except as a credit to the purchase price if WCD exercises its option, and shall be credited by the City to an operating account established by the City for the management, operation, maintenance of, and repairs to, the Carp Airport;

(iv)The City will not require WCD to make any additional payments beyond the Fifty Thousand ($50,000.00) Dollars initial payment unless a specific operating cost deficit is identified that requires such additional payments;

(v) In the event that WCD either fails to fulfill its obligations under the option agreement or does not exercise its option to purchase by the 31^st day of May 2005 all payments made by WCD will be forfeited to the City and if such payments total less than One Hundred and Fifty Thousand ($150,000) Dollars, WCD shall pay any resulting difference to the City failing which the City may draw upon the financial guarantee accordingly;

(vi) In the event that WCD fulfils its obligations under the option agreement and proceeds to enter into a Municipal Capital Facility Agreement for the acquisition of the Carp Airport, all payments made by WCD will be applied as a credit towards the purchase price of the Carp Airport; and

(vii)If the option term has been extended, then any additional consideration paid by WCD to the City for the extension period will be treated in like manner as the payments made during the option term and also applied as a credit to the purchase price.

(f) Upon the receipt of all required approvals contemplated by the option agreement, including planning and infrastructure approvals and consents from, and agreements by, Transport Canada and Nav Canada as are necessary for executing a Municipal Capital Facility Agreement for the transfer of the Carp Airport WCD and for the implementation of the Land Use Plan, WCD having complied with all the terms and conditions of the option agreement may exercise the option by notice in writing to the City on or before 4:00p.m. on the 31^st day of May 2005.

2. WCD agrees to ensure that the intended use of the Carp Airport will be compatible with, and conform to, the City’s overall planning policies, the City’s specific planning policies and economic development objectives for the Carp Airport and Community Design Plans being developed for the Village of Carp and the Carp Road Corridor and WCD specifically agrees as follows:

a) That WCD intends to develop the Carp Airport only in accordance with the Land Use Plan (Drawing # 102085-LUP Rev. 4 April 14/04 prepared by Novatech Engineering Consultants Ltd. for WCD) and WCD agrees to apply only for such planning and infrastructure approvals as are necessary to implement the Land Use Plan;

b) To apply for Official Plan and Zoning amendments for the agricultural resource lands, adjacent to the Carp Airport, which WCD currently has under option, only to permit limited use of these lands for the specific airport purposes within the areas set out in the Land Use Plan or as may be further directed by the City during the planning and infrastructure approvals process;

c) To apply for a zoning amendment that will maintain the “accessory” use provision for all residential dwelling units in the Airport Residential Accessory Community notwithstanding the intensity of development that may ultimately be permitted by amendments with respect to lot frontage, area and definition of accessory dwelling unit to accommodate communal hangar lots associated with single and multiple residential units;

d) To apply to develop the Airport Accessory Residential Community and the Aerospace Business Park only on the basis of Common Elements Condominiums;

e) To ensure that each residential lot will have either provision for a hangar on the same site or have a condominium interest in a communal facility (share of capital cost, operating cost, taxes etc.) as defined by a zoning amendment for accessory dwelling units;

f) To ensure that the ownership and operating arrangements established by WCD for the Carp Airport will provide for the each lot in the Common Element Condominiums to pay a relative share of the annual airport operation and maintenance costs as established from annual budgets approved by the Vendor;

g) To ensure that all deeds for the residential lots will have restrictive covenants with respect to restricting the residential use to the accessory use associated with ownership and operating responsibilities related to airside elements at the Carp Airport;

h) That the City will only transfer the portion of the Carp Airport designated in the City’s zoning by-law as Rural Residential (RR) to the Purchaser if this portion is rezoned Airport Industrial (MA) to be compatible with the zoning designation for the rest of the Carp Airport and WCD agrees to apply for this rezoning;

i) To apply for only one access/egress on Diamondview Road except where otherwise required by the planning & infrastructure approvals process;

j) That WCD’s applications for planning and infrastructure approvals will indicate that the perimeter of the Carp Airport will be fenced, with the access points secured from time to time as required by airport operations for the security of the pubic, and any capital, maintenance, and operating costs for the fencing/security will be assumed by WCD, as part of its development/operations at the Carp Airport;

3. WCD agrees that upon execution of the option agreement it will, entirely at its cost, become the proponent for the development and make application for, and obtain, all necessary planning and infrastructure approvals to implement the Land Use Plan, as contemplated in a memorandum dated the 14^th day of April 2004, attached hereto as Annex “B” which sets out the anticipated development and infrastructure approval requirements associated with implementing the Land Use Plan.

4. In the event that WCD, in carrying out the planning and infrastructure approvals process, encounters a requirement whereby the City must be the proponent, WCD will remain solely responsible to bear all related costs.

5. The City, in its capacity as owner, will assist WCD and use its best efforts to facilitate with respect to planning and infrastructure approvals and development activities that may involve participation by the City, in its capacity as owner, in obtaining approvals required under the option agreement and pursuing the development of the Carp Airport.

6. The City will obtain the surrender of the Head Lease from the Carp Airport Authority on or before the 31^st day of May 2004 and will then obtain any Transport Canada approvals or consents necessary to have the airport operating certificate transferred to the City.

7. The City will prepare a new draft Reference Plan for the Carp Airport, which will include, but not necessarily be limited to, parts related to the Municipal Airport Facility, Core Airport Area, Land Leases, Airport Accessory Residential Community, Aerospace Business Park, existing easements and encroachments, together with a building location survey plan by no later than the 31^st day of July 2004.

8. The City and WCD will establish the fair market value, as of 14^th day of May 2004, of the Airport Accessory Residential Community (401 acres) and Aerospace Business Park (181 acres) portions of the Carp Airport, using the City’s existing appraisal dated the 17^th day of November 2003, updated to the 14^th day of May, and at least one new independent fee appraisal, by no later than the 31^st day of August 2004.

9. The City will proceed, by no later than the 31^st day of August 2004 and with the cooperation and assistance of WCD, to apply for any other necessary approvals and consents from Transport Canada and Nav Canada with respect to any existing obligations, restrictions or outstanding matters in relation to agreements with Transport Canada and Nav Canada, including but not limited to the exclusion of the Airport Accessory Residential Community and Aerospace Business portions of the Carp Airport from the defined areas in the Option Agreement of the Transport Canada Agreements and the ASFA, and the assignment of the City’s rights and obligations under the Transport Canada Agreements to WCD.

10. The City, in assuming the Head Lease and becoming the landlord with respect to the Land Leases in the Core Airport Area for which the tenancies are currently on a month to month basis, will continue those tenancies on a month to month basis during the option period except that the City may offer and provide, until the 30^th day of June 2004, to those tenants, who wish to remain as tenants of the City and whose tenancies are in good standing with respect to the terms and conditions of the Land Leases, land lease extensions as follows:

a) Land Lease Extensions will provide for an initial term of 10 years, effective as of the 1^st day of January 2004, and a right to renew for one additional 10-year term except where the tenant commits to substantial new development or redevelopment, on or adjacent to the leased lands, in which case the City, subject to the consent of WCD, may provide an initial term of 20 years and a right to renew for an additional 10-year term;

b) The terms and conditions of the Land Lease Extension Agreements will be consistent with the Land Lease Extension Agreement dated the 9^thday of February 2004 between the Bradley Air Services limited (c.o.b. as First Air) and the Carp Airport Authority, as consented to by the City, except as follows:

i) Land Lease Extension Agreements may provide for expansion of the land area, within the Core Airport Area, only where a tenant indicates a specific requirement that is deemed appropriate by the City and the City agrees to the size and location of the expansion subject to the consent of WCD, which consent shall not be unreasonably withheld;

ii) Land Lease Extension Agreements will not provide any right-of first refusal, nor option, to lease any additional lands beyond the expansion area that may be provided by the City at the commencement of the initial term;

iii) Land Lease Extension Agreements will no longer include a reference that the Carp Airport may not be operated as an active airport facility after the Agreements with Transport Canada expire on the 14^th day of May 2007;

iv) Land Lease Extension Agreements will acknowledge that the development of the Carp Airport in accordance with the Land Use Plan may involve the relocation of certain Land Lease tenants and, as a result, include provisions with respect to the tenants right to quiet enjoyment of the leased lands to the effect that the City, including its successors or assigns, will have the right to relocate the tenant as required and be responsible for providing a compatible alternate site for the relocation and bear all costs for such relocation only up until the 14^th day of March 2007 after which time the City, including its successors or assigns, will still have the right to relocate the tenant but the City, including its successors and assigns, will then be responsible only for providing a site for the relocation and the tenant will then be responsible for the relocation and bear all costs for such relocation but in all cases, upon relocation, the tenant will be entitled to quiet enjoyment of the then leased lands for the balance of the initial and renewal terms.

11. The City and WCD agree to enter into an airport management agreement, by no later than the 31^st day of May 2004, with respect to the participation of WCD during the option term, in managing, operating, maintaining, and marketing the Carp Airport upon the basis of provisions as follows:

a) The term of the management agreement shall be concurrent with the option term being from the 1^st day of June 2004 until the 31^st day of May 2005.

b) In the event that Transport Canada does not grant its consent to the assignment of the City’s rights and obligations under the Transport Canada Agreements for the Core Airport Area, and the City continues as the owner and operator of that portion of the Carp Airport until the 14^th day of March 2007 when the provisions of the Transport Canada Agreements expire, and WCD has chosen to exercise the option with respect to the Aerospace Business Park and the Airport Accessory Residential portions of the Carp Airport lands, the management agreement will be amended to extend the term until the 14^th day of March 2007 with respect to the Core Airport Area and for WCD to manage, operate and maintain the Core Airport Area on the same basis that is provided for in its modified business plan for the Core Airport Area under WCD’s ownership except that the City will remain as the owner and operator of record.

c) The interim operation and management of the Carp Airport, during the option period, shall be in compliance with all obligations now contained in the Head Lease, Land Leases, the Transport Canada agreements, and any other existing agreements relating to the Carp Airport that remain in effect during the option period and also in accordance with all Transport Canada requirements and regulations, including associated Nav Canada rights and restrictions, governing the airport’s operations.

d) The City will remain as the owner and operator of record during the option period and will be responsible for and direct the day to day activities for managing, operating, maintaining and repairing the Carp Airport and will consider the advice of WCD and will, from time to time, delegate responsibility and authority to WCD as the City deems appropriate to assist the City in carrying out these responsibilities.

e) The Carp Airport will remain in the portfolio of the Venture Property Division of the Real Asset Management Branch (RPAM) of the City during the option period and the management, operations, maintenance, and repairing of the Carp Airport under the management agreement will be overseen and administered by that Division with the assistance of the Vendor’s Real Estate Division as directed by the Director of RPAM and the Director will appoint a contact person in the Branch to coordinate with WCD.

f) The City shall make office space at the Carp Airport available to WCD and WCD shall be responsible for providing any furniture and equipment for, or making any improvements to, this space at WCD’s sole cost.

g) WCD shall, during the term of the management agreement, be designated as the City’s agent with respect to operational matters at the Carp Airport involving Transport Canada and Nav Canada

h) WCD shall act as the primary contact with respect to all tenants having Land Leases at the Airport.

i) WCD shall be granted the exclusive responsibility and authority for marketing the Carp Airport during the option period in accordance with WCD’s marketing plan and for negotiating any new ground leases for the Aerospace Business Park and Core Airport Area portions of the Carp Airport that result from the marketing efforts of WCD under its marketing plan.

j) WCD, as part its marketing efforts during the option period, will prepare plans for the location and construction of a third 20 bay T-Hangar and market this hangar, on the basis that construction will commence only when 75% of the units have been sold and City Council has approved the financial arrangements for the construction, and using the form, terms and conditions of agreement consented to by the City for the first two T-Hangars constructed by the Carp Airport Authority except for the rent or sale price which shall be determined by mutual agreement of WCD and the City and be based upon WCD’s estimates of costs for constructing the hangar.

k) The City will enter into new ground lease agreements for the Aerospace Business Park and Core Airport Area portions of the Carp Airport, as may be negotiated and recommended by WCD during the option term, provided that the new facilities and leases are undertaken in compliance with all applicable existing regulations and agreements, including the option agreement, and the provisions of the leases are consistent with the provisions for Land Lease extension agreements except for the rent for a new ground lease in the Aerospace Business Park which rent will be established by mutual agreement of the City and WCD prior to WCD finalizing the negotiations with the tenant.

l) The City will continue the administrative, employee and contract arrangements for managing, operating, and maintaining the Carp Airport as currently provided by the City and Carp Airport Authority except that the Carp Airport Authority shall no longer have any responsibility or authority for directing any of the day to day activities for managing, operating, maintaining and marketing the Carp Airport and will be retained only as an advisory board to the City and as a supplier of services, based on agreement between the City and the Carp Airport Authority at the time that the Head Lease is surrendered to, and assumed by, the City, and any such services provided by the Carp Airport Authority will be carried out solely upon the direction of the City or WCD where WCD has been delegated authority by the City.

m) The City will be solely responsible for administering and managing the employees and service contracts for the Carp Airport but will, from time to time, provide authority to WCD to oversee and direct the activities of these resources as deemed appropriate by the City.

n) The RPAM Branch contact person shall act as the primary contact for the Carp Airport Authority and will meet on a regular basis with the Airport Authority’s Board of Directors as agreed with the Board to receive information and advice from the Board with respect to the Carp Airport and associated matters.

o) The City will, in its sole discretion, establish the operating budget during the option period, based on the 2004 operating budget established by the Carp Airport Authority, and be responsible for the all costs associated with managing, operating, maintaining and repairing the Carp Airport during the option period and for the financial administration of the operating budget subject to the City’s right to fund any cost deficit from the payments made by WCD as consideration for the option.

p) WCD shall not be entitled to receive any compensation or other consideration for its work, or the work of its consultants, associated with providing WCD’s services under the provisions of the management agreement unless special circumstances are identified and the City issues a purchase order to WCD, or its consultants, prior to any work being undertaken.

q) WCD shall maintain at its own expense professional liability insurance and commercial general liability insurance in the amount of $2,000,000.00 to protect the City from any claims or loss or damages which may arise from its services under the management agreement and certificates of such insurance shall be filed with the City and shall be subject to its approval as to the adequacy of coverage.

12. In the event that WCD fulfils its obligations under the option agreement; receives all required approvals to implement the Land Use Plan and, having complied with all the terms and conditions of the option agreement, exercises this option by notice in writing to the City on or before 4:00 p.m. on the 31^st day of May 2005, the City and WCD agree that, within thirty (30) days of WCD exercising its option, the City and WCD will enter into a Municipal Capital Facility Agreement for the development, operation and maintenance of the Carp Airport and which provides for the City to transfer the Carp Airport to WCD based upon terms and conditions that are consistent with, and include for, the provisions of the option agreement, any planning and infrastructure approval requirements, Transport Canada approvals, the Transport Canada agreements, the ASFA, the Land Leases, the resulting Modified Business Plan and provisions as follows:

a) That the city will designate a Municipal Capital Facility at the Carp Airport that will include a Municipal Airport Facility and the Transportation, Service, and Recreational and Environmental Corridors in the Aerospace Business Park and Airport Accessory Residential Community.

b) That the Municipal Airport Facility will be designated by the City as that portion of the Core Airport Area that will be exempt from property taxes and managed, operated and maintained without being subsidized by the City and will include all runways, taxiways, clearways, aprons, and other public use facilities for which all the management, operational, maintenance, and repair costs will be shared on a relative basis amongst all owners and tenants at the Carp Airport.

c) That the Transportation, Service, and Recreational and Environmental Corridors will be designated by the City as those portions of the Carp Airport which will be set aside as common elements in the Common Elements Condominiums for the Aerospace Business Park and Airport Accessory Residential Community in which services and improvements contemplated by WCD’s Land Use and Infrastructure Plan, upon completion by WCD and acceptance by the City, will be treated as public systems and facilities.

d) That all planning and infrastructure approvals, except for any approvals required as a condition of final registration of the common elements condominiums and specific site plan applications, required to implement the Land Use Plan, must be received on or before the last day of the option period as a condition for executing the Municipal Capital Facility Agreement and transferring the Carp Airport from the City to WCD.

e) That WCD will be responsible for undertaking any work, including but not limited to the relocation of the existing Nav Canada equipment, required by Transport Canada and Nav Canada under the conditions associated with their consents or approvals with respect to the implementation of the Land Use Plan under the Municipal Capital Facility Agreement and the Purchaser will bear all costs of such work.

f) That WCD shall have full responsibility for implementing its modified business plan for the Carp Airport and for funding all approval and development costs, including all infrastructure and servicing costs, associated with such implementation and the City will have no responsibility for any costs related to the development of the Carp Airport project.

g) That all existing infrastructure capacity provided by the City at the Village of Carp is currently reserved for the Village of Carp and WCD will bear all servicing costs related to connecting the services development at the Carp Airport to the Village of Carp services and upgrading the services for the Village of Carp to accommodate the development at the Carp Airport with some potential for cost sharing to apply if the timing/funding of expansions to infrastructure servicing the Village of Carp is compatible as outlined in Annex “B” attached hereto.

h) That the Municipal Capital Facility Agreement will provide for WCD, solely at its cost, to construct the Municipal Airport Facility Improvements as outlined in the Carp Airport Master Plan of the Modified Business Plan and these improvements will be carried out as part, and at the beginning, of the first phase of WCD’s development of the Carp Airport.

i) That any lease revenue received from the existing sub-tenants located within the Core Airport Area will continue to be allocated to the Operating Budget for the Municipal Airport Facility as a condition of the Municipal Capital Facility Agreement.

j) That WCD, in consultation with the City, will prepare an operating budget for the first year of operation of the Municipal Airport Facility and an associated five (5) year operating forecast, based upon WCD’s experience gained during the option period in carrying out its duties under the Management Agreement, for review and approval by the City.

k) That WCD, in preparing the operating budget and in consultation with the City, will investigate the most cost effective manner for placing adequate insurance coverage on the Municipal Airport Facility and this may result in the City continuing to keep this part of the airport covered under the City’s insurance on a cost recovery basis from WCD and the Municipal Capital Facility Agreement will make provision for this accordingly.

l) That should WCD have a business need to locate a facility within the Core Airport Area that, for financial reasons, would require the lease revenue to accrue to WCD’s benefit rather than the operating budget and/or the establishment of an encumbrance on the lands upon which the facility is to be relocated, WCD and the City will agree, as a condition to permit the facility, to revise the boundary of the Core Airport Area to exclude the lands upon which the facility is to be located and, where required by the City, replace these lands with a compatible alternate parcel of land from the Aerospace Business Park and/or Airport Accessory Residential Community lands that is contiguous with the Core Airport Area and amend the Municipal Capital Facility Agreement accordingly.

m) That WCD, prior to execution of the Municipal Capital Facility Agreement, will establish a governance structure for the Municipal Airport Facility under which WCD, upon transfer of the Carp Airport by the City, will be solely responsible for the day to day activities in the management, operation, and maintenance of the Municipal Airport Facility and for appointing a board of directors to oversee such day to day activities but will also allow for the City to maintain an advisory board, having a similar role and representation as provided for the Carp Airport Authority during the option period with respect to the City’s continuing interests in the Municipal Airport Facility under the provisions of the Municipal Capital Facility Agreement.

n) That, in fulfilling its obligations under the option agreement and the Municipal Capital Facility Agreement, including conveyancing or financial transactions related thereto, WCD will not create or permit an encumbrance or encumbrances on the Core Airport Area which would impair the economical operation of the Municipal Airport Facility and the Land Lease tenants operating thereon and further to this, WCD will ensure that Land Lease tenants in the Core Airport Area will be provided with quiet enjoyment and non-disturbance provisions, subject to the relocation provisions in the Land Lease, whereby they may operate economically and continue to occupy their premises notwithstanding the financial status of WCD, including its bankruptcy, at any stage of the development of the Carp Airport as provided for in the option agreement.

o) That WCD will secure, subject to execution of the Municipal Capital Facility Agreement and transfer of the Carp Airport from the City to WCD, a funding commitment from a lender satisfactory to the City and then have the funding in place at the time of closing which funding is sufficient for WCD to undertake and complete the first phase of the development as then set out in the modified business plan and as specifically detailed in the financial plan attached thereto.

p) That the purchase price for the transfer of the Lands will be the sum of:

i) The fair market value of the Airport Accessory Residential Community and Aerospace Business Park portions of the Carp Airport; and

ii) Nominal consideration for the Core Airport Area.

q) That the purchase price shall be payable by the total amount of the all payments made by WCD, as received by the City during the option period, or approved extension thereof, until such time that WCD exercises the option, and the balance by certified cheque or bank draft on closing.

r) That the fair market value for the Aerospace Business Park and Airport Accessory Residential Community portions of the Carp Airport will be determined by mutual agreement of the City and WCD using the City’s existing appraisal dated the 17^th day of November 2003, updated to the 14^th day of May 2004, and at least one new independent fee appraisal carried out on the basis of the valuation date being the 14^th day of May 2004 and the areas of the lands being as shown on a Reference Plan prepared by the City and on the understanding that the fair market value established by the parties shall be subject to approval by Transport Canada or if Transport Canada does not approve the value submitted by the parties to Transport Canada deeming the value which will then become the fair market value.

s) That the closing date for the completing the sale and transfer of the Carp Airport from the City to WCD shall be the thirtieth day after the exercise of the option unless on that day the Registry Office is closed, in which case the sale shall be completed on the next day following when the registry Office is open.

t) That in the event that Transport Canada does not grant its consent to the assignment of the City’s rights and obligations under the Transport Canada Agreements for the Core Airport Area, and the City continues as the owner and operator of that portion of the Carp Airport until the 14^th day of March 2007 when the provisions of the Transport Canada Agreements expire, and WCD has chosen to exercise the option with respect to the Aerospace Business Park and the Airport Accessory Residential portions of the Carp Airport lands, the option term with respect to the Core Airport Area portion of the Carp Airport lands will be automatically extended, at no further cost to WCD, until the 14^th day of March 2007 and the management agreement will be amended in accordance of the provisions of paragraph 11(b) above.

u) That during such extended option term, WCD will manage, operate and maintain the Core Airport Area on the same basis that is provided for in its modified business plan for the Core Airport Area under WCD’s ownership except that the City will remain as the owner and operator of record and WCD will carry out its obligations for managing, operating, and maintaining the Core Airport Area as the City’s designated agent in matters relating to the Transport Canada agreements.

v) That at the end of such extension term, and upon expiration of the Transport Canada Agreements, on the 14^th day of March 2007, the Core Airport Area will be transferred by the City to WCD at nominal cost on or before the 31^st day of March 2007.

w) That WCD shall grant to the City a continuing option to repurchase the Core Airport Area at nominal cost, without the City being required to provide further compensation or consideration to WCD for improvements made by WCD to the Municipal Airport Facility, in the event WCD, at any time, is in default with respect to the terms and conditions of the Municipal Capital Facility Agreement.

ANNEX B

Memorandum

14 April 2004

cArp airport

1.0 PURPOSE

On 31 October 2003, West Capital Developments (WCD) submitted to the City of Ottawa, under confidential cover, a Business Plan for the planning, development, operation, and future ownership of the City’s Carp Airport property.

The Business Plan has subsequently been modified as the result of negotiations between the City and WCD and it is now the intent of the City and WCD to enter into an agreement whereby WCD will obtain an irrevocable option to purchase the Carp Airport property.

The purpose of this memorandum is to set out the anticipated development and infrastructure approval requirements associated with implementing the modified Business Plan.

2.0 Background

2.1 City Council Direction

On 25 February 2004, City Council, in its capacity as property owner, did not approve the WCD Business Plan as submitted and instead directed staff to finalize negotiations with WCD with respect to an option to purchase agreement for the Carp Airport property and to bring forward a report for consideration by the Corporate Services and Economic Development Committee and Council in April 2004 based on modifications to WCD’s Business Plan and on conditions that will:

a. Ensure that the proposed development will be compatible with the City’s planning policies, and with the Community Plans for the Carp Village and Carp Road Corridor;

b. Require WCD to fully fund all approval and development costs associated with implementing the modified Business Plan;

c. Eliminate any financial risk for the City; and

d. Ensure that the existing airport operations and tenancies will not be adversely affected should the WCD Business Plan not be fully implemented for whatever reason.

This direction was based on written confirmation from WCD, received by the City on 10 February 2004, that the 23 specific conditions for an option to purchase agreement, as set out in Annex 'B' of the report considered by Council on 25 February 2004, were acceptable to WCD at that stage of negotiations and would meet the intent of the above conditions (a) to (d).

2.2 Option to Purchase Agreement & Modifications to WCD Business Plan

As a result of the Council direction of 25 February 2004 and further consultation between WCD and the City, the WCD Business Plan has been modified as a basis for finalizing an option to purchase agreement and for setting out the anticipated development and infrastructure approval requirements for implementing the modified plan.

2.2.1 Modifications to WCD Land Use Plan

The land use plan, prepared by WCD as part of its business plan, has now been modified to be consistent with, and allow for further refinement of, the conditions set out in Annex “B’ of the 25 February 2004 Council report with regard to an option to purchase agreement for the Carp Airport property.

The resulting Carp Airport Land Use Plan, Drawing # 102085-LUP Rev. 4 April 14/04 prepared by Novatech Engineering Consultants Ltd., attached hereto, is now the basis for identifying development and infrastructure approvals required to implement the modified plan.

The modified WCD Land Use Plan proposes that the entire Carp Airport property (approximately 967 acres) be planned under an airport designation and be developed into three districts as follows:

· Core Airport Area (approximately 385 acres),

· Aerospace Business Park (approximately 181 acres), and

· Airport Accessory Residential Community (approximately 401 acres).

The modified WCD Business Plan now provides that the Land Use Plan will be implemented by way of separate common elements condominiums for the Airport Accessory Residential Community and the Aerospace Business Park and by way of another agreement with WCD for the ownership, operation, maintenance, and development of the Core Airport Area. These arrangements will be established under the umbrella of a Municipal Capital Facilities Agreement (MCFA) between WCD and the City.

The Land Use Plan also requires the airport to expand to include lands, north of the City’s Carp Airport property between the Diamondview Road and Thomas Argue Road, which are currently designated Agricultural resource, in order to allow:

· The main runway to be extended to 6000 ft. in length as required by the modified Business Plan and include for associated equipment and operational restrictions;

· The construction of a preferred access point to the airport from Diamondview Road; and

· The stormwater management pond for the majority of the airport property to be suitably located.

2.2.2 Infrastructure Plan

The land use and servicing polices for the Carp Airport, as set out under Sections 3.10.2 and 2.3.2 respectively of the Official Plan, provide for a Public Service Area at the Carp Airport.

In order to support the extent of development and economic activity set out in the modified WCD Land Use Plan, in an economically feasible and environmentally sound manner consistent with the provisions of the OP, the modified WCD Business Plan also sets out an Infrastructure Plan that requires public water and wastewater services within the Public Service Area at the airport and the connection of these to the Village of Carp services.

The 23 conditions for an option to purchase agreement, as set out in Annex “B” of the 25 February 2004 Council Report, include a condition that all existing infrastructure capacity at Carp Village is currently reserved for Carp Village and WCD agrees that all development/servicing (internal/external) costs for development at the airport are to be borne by WCD with some potential for cost sharing to apply if the timing/funding of upgrades to Carp Village servicing is compatible.

The City is currently in the process of establishing a Community Design Plan for the Village of Carp that contemplates planned expansion of the Village that, based on current flows and City standards, will most likely require upgrades to the facilities provided for that Public Service Area including upgrading of the Hines Road sewer, sewage pumping station, and possibly for twinning of the sewage forcemain. However, presently there is capacity for more growth in Carp Village.

The planned economic growth at the Carp Airport, as set out in the WCD Business Plan, requires connection of services from the Public Service Area at the Carp Airport to the services at the Village and will, therefore, necessitate similar upgrades to the facilities servicing the Village as those potentially needed for the planned Village expansion.

In order to understand the role and cost participation related to the planned expansion within the Public Service Areas for the Village of Carp and the Carp Airport, the WCD Infrastructure Plan now provides for an assessment of the timing and scale of required upgrades firstly in consideration of planned growth in the Village of Carp then followed by incorporation of planned airport growth.

This assessment will identify whether the proposed upgrades include capital projects that could be undertaken by the City and funded by Development Charges and the extent to which these services might need to be constructed in the first instance by WCD under a front ending agreement.

2.2.3 WCD as Proponent

Since it is the intention that the City and WCD will enter into an option to purchase agreement under which WCD will have the irrevocable right to purchase the property, subject to WCD’s compliance with the terms and conditions of that agreement, WCD will thereby have a contract interest in the property. Upon execution of the option to purchase agreement, WCD will, therefore, become the proponent with respect to applying for, and obtaining, all necessary development and infrastructure approvals required to implement the WCD’s Land Use Plan and associated Infrastructure Plan for the Carp Airport as a private initiative.

2.2.4 Municipal Capital Facilities Agreement

The option to purchase agreement between the City and WCD, subject to Council approval, will provide for the City and WCD to enter into a Municipal Capital Facility Agreement (MCFA) for the Carp Airport property now owned by the City as shown by the boundary indicated on the attached Carp Airport Land Use Plan.

The MCFA will include provisions with respect to the Aerospace Business Park, Airport Accessory Residential Community, and Core Airport Area.

The Core Airport Area will be established as shown on the attached Core Airport Area Plan, Drawing # 102085-CAA Rev. 3 April 14/04 prepared Novatech Engineering Consultants Ltd., for the purposes of:

· Valuing and declaring lands outside the Core Airport Area as surplus to airport needs with respect to the existing provisions of the Transport Canada Agreements and for amending the existing agreements between the City and Transport Canada/Nav Canada accordingly;

· Designating those airport tenants whose ground lease revenue will accrue to the “Municipal Airport Facility” operations; and

· Establishing the limits of the portion of the Carp Airport which WCD shall maintain free of any further encumbrances as it finances and develops the Carp Airport and which portion of the Carp Airport may be repurchased by the City should WCD, at any time, be in default under the terms and conditions of the MCFA.

The "Municipal Airport Facility" will be defined to include that portion of the Core Airport Area that will be operated and maintained on a self-sustaining basis and will include all runways, taxiways, clearways, aprons, and other public use facilities for which all the operational/maintenance/repair costs will be shared proportionately amongst all owners/tenants at the Carp Airport.

A "Municipal Capital Facility" will be defined to include for the Municipal Airport Facility and the "Transportation, Service, and Recreation/Environmental Corridors" (roads, services and open space provided as common elements in the Aerospace Business Park and Airport Accessory Residential Community) for the purpose of maintaining a general aviation airport facility and for defining those lands/facilities that will remain property tax exempt under the provisions of the MCFA;

As part of the arrangements for the proposed MCFA, and upon WCD satisfying the City that WCD has completed the works/facilities associated with the Transportation, Service, and Recreational/Environmental Corridors in accordance with the provisions of the MCFA and all other approval requirements, the City will be responsible for the maintenance, repair and replacements of these works/facilities.

The "Private Taxiways" serving the residential hangars, as shown on the attached Land Use Plan, will not be part of the Municipal Capital Facility but will be maintained and operated in conjunction with the Municipal Airport Facility on a full cost recovery basis under the provisions of the MCFA.

2.2.5 Environmental Site Assessments

The option to purchase agreement with WCD will include a provision, as normally included in real estate transactions, for undertaking environmental site assessments as part of the purchaser’s due diligence work. As a result, the completion of the sales transaction, contemplated by the option to purchase agreement, will be subject to the City and WCD reaching agreement as to how any existing environmental concerns identified by WCD’s investigations will be addressed.

2.3 Framework for Development & Infrastructure Approvals

The anticipated development and infrastructure approvals requirements, as set out in Section 3 below, are framed upon the understandings indicated above for this contemplated real estate transaction between the City and WCD and, in particular, on the basis that the City & WCD will enter into an option to purchase agreement for the Carp Airport property whereby WCD obtains an interest in the property and becomes the proponent for applying for all necessary development and infrastructure approvals.

3.0 Steps to PLANNING Approvals

The implementation of the Carp Airport Land Use Plan will require WCD, as proponent, to obtain a number of development approvals. The required approvals include:

§ Airport Expansion - Official Plan and Zoning Amendments

§ Common Elements Condominium - Airport Accessory Residential Community

§ Common Elements Condominium - Aerospace Business Park

§ Zoning Amendments

§ Site Plan Control

3.1 Airport Expansion

An Official Plan Amendment application will be required to redesignate the lands required for the airport expansion from “Agricultural Resource” to “Carp Airport”. The application for an Official Plan Amendment will be supported by a planning report that demonstrates the "need" to redesignate these lands.

The runway expansion will also necessitate the modification of the Airport Operating Influence Zone (AOIZ), illustrated on Schedule “K” of the Official Plan. This modification request will form part of the Official Plan Amendment application.

In order to implement the Official Plan Amendment expanding the designated airport area, the zoning for this area will also have to be amended from "Rural Zone" (RU) to "Airport Industrial Zone" (MA), consistent with the rest of the airport property.

3.2 Common Elements Condominium Applications

The Airport Accessory Residential Community and Aerospace Business Park are each proposed to develop by way of a separate common elements condominium. The common elements will include open space blocks and all streets. Streets and services will be built to municipal standards, and maintained and replaced as required by the City under the terms of the proposed MCFA. Similar to a subdivision application, the common elements condominium applications for the Airport Accessory Residential Community and Aerospace Business Park will be supported by the following studies:

§ Tree Retention and Planting Plan

§ Transportation Impact Study

§ Stormwater Site Management Plan

§ Serviceability Study

§ Noise Control Feasibility Study (250m from highway / 100m from arterial)

§ Geotechnical Report

§ Appropriate setbacks from rivers, lakes and streams

§ Integrated environmental review to assess development applications (Summary of all environmental studies/assessments submitted with development application)

§ Environmental Impact Statement

§ Environmental Assessment

§ Slope Stability Study

§ Phase 1 and Phase 2 Environmental Site Assessment

Each of the above-mentioned studies will be prepared for the entire airport lands, in support of both the Airport Accessory Residential Community and Aerospace Business Park common elements condominium applications.

3.2.1 Airport Accessory Residential Community

In addition to the above noted studies, due to the Airport Land’s proximity to a Sand and Gravel Resource Area, an Impact Assessment Study will be required in support of the Airport Accessory Residential Community common elements condominium application.

The south west corner of the property comprised of Phase 5 of the land use plan is within the influence area of lands designated Limestone Resource Area. There are a number of outstanding appeals to the City OP related to Limestone Resource policies. Depending on the outcome of these appeals, an additional Official Plan Amendment application may be required in order to permit residential development in Phase 5.

3.2.2 Aerospace Business Park

In addition to the above noted studies, due to the Airport Land’s proximity to active farm operations, Minimum Distance Separation Calculations will be required in support of the Aerospace Business Park common elements condominium application.

3.3 Zoning Amendments

Zoning amendments are required for that part of the Airport Accessory Residential Community located west of the collector road. The units in this area will not have direct access to taxiways, and, therefore, will not develop with hangars. The smaller single-family lots will require zoning that establishes appropriate minimum lot area and lot frontage requirements. A second zone will be required for the proposed multiple unit blocks.

Also, there is a need to refine the existing airport zoning as it relates to the Airport Accessory Residential Community. A refined zone could limit uses that will be permitted for these lands and also modify performance standards.

The City of Ottawa is updating the Wellhead Protection Area Study that was completed for the communal wells servicing the Village of Carp. Special zoning provisions may be required for that portion of the wellhead protection area that falls within the Aerospace Business Park in order to restrict land uses that have the potential to cause contamination of groundwater resources.

All airport lands presently zoned "Rural Residential Zone" (RR) will be rezoned to Airport Industrial Zone (MA).

Finally the "h" or holding designation will be lifted from any remaining lands zoned "Airport Industrial Zone - Holding" (MA-h). The lifting of the “h” will be processed concurrently with the related zoning amendment applications.

4.0 Implementation of Plans

4.1 Servicing

The WCD Infrastructure Plan requires public water and wastewater services within the Public Service Area at the Carp Airport to be connected to the Village of Carp services.

A functional design regarding these services and connection to the Village services is now required in order to finalize interim and ultimate works, along with operations and maintenance plans associated with phasing, growth, build out and long term functioning of the infrastructure.

Servicing the site in this manner can be generally divided into three servicing issues:

1. Within the Public Service Area at the Carp Airport, there is expected to be a typical servicing arrangement with all services designed to meet City of Ottawa standards with the approval of on site services being obtained by WCD, as proponent, through the common elements condominium approvals process.

2. Transmission facilities will be constructed between the development site and the point of connection to existing systems in Carp. Frontage connection by adjacent landowners to these services will not be permitted. Directly connected additional facilities (e.g. pump stations) or interim facilities may be required and, for the purpose of this description, are considered to be part of the transmission facilities. Pending finalization of the nature, timing, phasing and ultimate servicing strategy for the transmission facilities, it is expected that WCD, as proponent, will obtain approval of the transmission facilities as a private undertaking in association with the approvals for the common elements condominiums since it is expected that these undertakings will fall under either Schedule A or B projects under the Class Environmental Assessment process. WCD will obtain the City’s agreement regarding all aspects of the servicing proposal before commencing the formal approval process.

3. Upgrading of existing facilities serving the Village of Carp will be required to accommodate the airport development. In order to understand the role and cost participation related to connection of the airport to Carp, the proponent will assess the timing and scale of required upgrades firstly in consideration of planned growth in the Village of Carp then followed by incorporation of planned airport growth. The proponent will then define the attribution of costs of upgrade requirements among three groups as follows:

· The airport,

· Existing development in the Village of Carp, and

· New growth in the Village of Carp.

Calculations will be completed in a manner that facilitates incorporation of applicable costs into the City of Ottawa Development Charge By-law. In addition, and in association with development of an overall servicing strategy, the proponent will complete a technical assessment of early servicing opportunities to existing infrastructure. The assessment will incorporate Carp growth and airport growth, along with technical measures to protect serviced property, all to the satisfaction of the City of Ottawa.

Servicing issues which have been a matter of discussions between the City and WCD, and which need to be addressed as part of the WCD assessment, include:

· Hines Road sewer upgrade

· Early servicing (interim capacity) allowance

· Twin forcemain

· Sewage pump station upgrade

· Water supply and wellhead protection,

· Water treatment, and distribution capacity

· Sewer Assessment for hydrogen sulphide problems during low flows

All capital works projects, which may be identified by the WCD assessment as being undertaken by the City of Ottawa, will require the approval of City Council. The Development Charges By-law will define the applicability of development charge reserves towards any particular capital project. The Technical assessment will also determine the extent to which capital projects may be completed by WCD under a front ending agreement in accordance with the Development Charges By-law and provincial legislation.

WCD will have the option of developing specific sites within the Aerospace Business Park on the basis of private services until such time that municipal services are extended subject to approval by the City.

4.2 Runway Improvements & Expansion

Transport Canada will be informed of plans for the runway expansion at each step of the process. The expansion does not require Transport Canada approvals for design, construction, etc. The runway expansion will require certification by Transport Canada at the end of the process.

The expansion of the runway and associated improvements to taxiways, etc. will not require site plan approval.

Relocation of the Creek, west of the runway extension, will require City of Ottawa, MVC and Department of Fisheries and Oceans approvals. MOE approval will also be required if flow changes from agricultural drainage to development runoff.

The development contemplated by the modified Land Use Plan will require, and be subject to, amendments to the existing agreements with Transport Canada and Nav Canada. Development at the Carp Airport, and in particular the development of the Common Elements Condominium, will be subject to restrictions associated with operating the existing/relocated Nav Canada navigational equipment.

4.3 Common Elements Condominium Approvals

4.3.1 Additional Studies, Assessments and Approvals

The common elements condominium applications for the Airport Accessory Residential Community and Aerospace Business Park will require completion of the following studies as a condition of final registration:

§ Erosion Sediment and Control Plan

§ Archaeological Assessment

§ Stormwater Site Management Plan

§ Final Tree Preservation and Planting Plan

§ Other plans that may be required to fulfil conditions of approval

In addition to the completion of the above noted studies, the following approvals will be required prior to registration of the plans of condominium:

§ On-site services will require City of Ottawa and Ministry of Environment approvals

§ Stormwater Site Management will require City of Ottawa, Ministry of Environment, Mississippi Valley Conservation Authority Approvals and Department of Fisheries and Oceans Approvals

The above-mentioned studies and approvals will be sought for the entire airport lands, in order to facilitate the final registration of both the Airport Accessory Residential Community and Aerospace Business Park common elements condominiums.

Additionally, the following approvals, which will be required prior to registration of the plans of condominium, will be sought separately for the Airport Accessory Residential Community and Aerospace Business Park:

§ On-site roads will require City of Ottawa and Ministry of Environment approvals

§ Off-site road improvements will require City of Ottawa approval

5.0 Site Plan Applications

Site plan applications will be filed as required for all commercial, industrial and multiple unit blocks as well as for construction of any of the following:

§ a building or structure over 100 square metres in gross floor area;

§ a communication tower exceeding 16.6 metres above ground level;

§ an addition to a building or structure which results in the building or structure being over 100 square metres in gross area after the making of the addition;

§ an addition to a communications tower which, after the making of the addition, exceeds 16.6 metres above ground level; or

§ any other building or structure if the gross floor area of the addition, combined with any addition during the previous 12-month period, is greater than 100 square metres.

Any site plan application will be supported by the following plans:

§ Site Plan

§ Site Servicing Plan

§ Landscape Plan

§ Grade Control and Drainage Plan

§ Stormwater Site Management Plan

§ Composite Utility Site Servicing Plan (if new construction 250 m² GFA or more)

6.0 Terms of Reference and timeLines

A number of the required studies have standard terms of reference while others will have to be developed specifically for this project. Terms of Reference for all required studies shall be developed in cooperation with City Staff by the 15^thday of June 2004. Accompanying, the terms of reference will be a Schedule of Work that includes timelines for submission of respective studies, applications (planning and MOE) and for receipt of approvals. The objective is to establish a Schedule of Work that is compatible with the proposed one-year option term.

It is the intent that the option to purchase agreement between the City and WCD for the Carp Airport property will be approved by City Council and executed by the 31^st day of May 2004 and that the Community Design Plan for the Village of Carp will be established by the end of July 2004. It is agreed, subject to City Council approval, that WCD will complete, by the end of August 2004, the assessment of facilities needed to accommodate the planned growth within the Public Service Areas for the Village and the Airport in order to identify any capital project that could be funded from the reserves established under City’s Development Charges By-law and for the City to include, as appropriate, this project(s) in the By-law at the earliest possible opportunity.

CARP AIRPORT - LAND USE PLAN

CARP AIPORT - CORE AIRPORT AREA PLAN