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HomeMy WebLinkAbout14 061 Memorandum of Agreement Natural Gas Project (2014) By-law THE CORPORATION OF THE MUNICIPALITY OF KINCARDINE KBT _ tO � � 1%i C /qpry OF KINK� BY -LAW NO. 2014 - 061 BEING A BY -LAW TO ENTER INTO MEMORANDUM OF AGREEMENT WITH THE CORPORATION OF THE MUNICIPALITY OF ARRAN - ELDERSLIE AND THE CORPORATION OF THE TOWNSHIP OF HURON - KINLOSS TO EXPLORE THE CREATION OF A NATURAL GAS SERVICES COMPANY • WHEREAS Sections 8 (1) and 9 of the Municipal Act, 2001, S.O. 2001, c.25, as amended, provide that the powers of a municipality under this or any other Act shall be interpreted broadly so as to confer broad authority on the municipality to enable the municipality to govern its affairs as it considers appropriate and to enhance the municipality's ability to respond to municipal issues and has the capacity, rights, powers and privileges of a natural person for the purpose of exercising its authority under this or any other Act; AND WHEREAS the Council of The Corporation of the Municipality of Kincardine deems it expedient to enter into a Memorandum of Agreement with The Corporation of The Municipality of Arran - Elderslie and The Corporation of The Township Of Huron - Kinloss to explore the creation of a new municipal gas services company to pursue the feasibility, development, ownership and operation of natural gas transmission, distribution and storage facilities required to provide services to the communities; NOW THEREFORE the Council of The Corporation of the Municipality of Kincardine ENACTS as follows: • 1. That The Corporation of the Municipality of Kincardine enter into Memorandum of Agreement with The Corporation of The Municipality of Arran - Elderslie and The Corporation of The Township Of Huron - Kinloss, attached hereto as Schedule `A'. 2. This by -law shall come into full force and effect upon its final passing. 3. This by -law may be cited as the "Memorandum of Agreement Natural Gas Project (2014) By -law ". READ a FIRST and SECOND TIME this 7th day of May, 2014. READ a THIRD TIME and FINALLY PASSED this 7th day of May, 2014. .1 Mayor Clerk 1111 This is Schedule " A " to By Law Schedule "A" No.201'+ 3(d passed the .2_ day of Ma 20 H MEMORANDUM OF AGREEMENT THIS AGREEMENT made as of the 21 day of April, 2014 (the "Effective Date "). BETWEEN: THE CORPORATION OF THE MUNICIPALITY OF KINCARDINE , (hereinafter referred to as "Kincardine ") - and - THE CORPORATION OF THE MUNICIPALITY OF ARRAN - ELDERSLIE (hereinafter referred to as "Arran - Elderslie ") - and - THE CORPORATION OF THE TOWNSHIP OF HURON - KINLOSS (hereinafter referred to as "Huron - Kinloss ") (hereinafter separately referred to as "Participant" and collectively referred to as "Participants ") RECITALS 1. The municipalities of Kincardine, Arran - Elderslie and Huron - Kinloss are the largest communities in Southwestern Ontario that are not serviced by a dedicated natural gas utility. 2. The Participants have agreed to explore the creation a new municipal gas services company to pursue the feasibility, development, ownership and operation of natural gas transmission, distribution and storage facilities required to provide gas services from one or more inter - connects on the Owen Sound Gas Transmission Line owned by Union Gas Limited ( "Union ") to the Participant communities. 3. The Participants have agreed to enter into a legally binding agreement to pursue the objectives described below. NOW THEREFORE, in consideration of the premises hereto and the mutual covenants and agreements hereinafter set forth, and for good and valuable consideration the receipt and sufficiency of which the parties acknowledge, the parties hereto covenant and agree as follows: ARTICLE 1 INTERPRETATION 1.1 Definitions. In this Agreement, capitalized terms shall have the meaning ascribed thereto in this Agreement, and if no such meaning is so ascribed, then as defined below, unless the context otherwise requires: (a) "Agreement ", "hereto ", "hereof ", "herein ", "hereby ", "hereunder" and similar terms mean and refer to this binding Agreement and all written instruments made by the parties hereto to supplement, amend or confirm this Agreement; (b) "Area" means the area of Ontario within the Municipality of Kincardine, the Municipality of Arran- Elderslie, and the Township of Huron - Kinloss; (c) "Facilities" means, collectively, the natural gas transmission, distribution, storage and compression facilities and related equipment from one or more inter - connects on the Owen Sound Gas Transmission Line owned by Union required to provide natural gas service to the Participant communities; (d) "Participant" or "Participants" shall include the Persons identified as such above; and (e) "Person" means a natural person, co- operative, firm, trust, partnership, limited partnership, company, or corporation (with or without share capital), joint venture, sole proprietorship, governmental authority or other entity of any kind. 1.2 Currency. All dollar amounts referred to in this Agreement shall be stated in Canadian funds. 1.3 Schedules. The following are the schedules annexed to and incorporated in this Agreement by reference and deemed to be a part hereof: (a) Schedule "A" — Governance Checklist. ARTICLE 2 OBJECTIVES AND PURPOSES 2.1 Objectives and Purposes. The Participants have entered into this Agreement for the purpose of achieving the following objectives: (a) to create and fund a jointly owned, commercially oriented, for - profit municipal services corporation pursuant to Section 203 of the Municipal Act, 2001, as amended, the purpose of which will be to achieve the objectives set out in subsections (b) through (e) below (the "Municipal Gas Utility "); -2- (b) to investigate technical, legal, commercial, and financial options and feasibility for constructing, owning and operating the Facilities; (c) the creation of a business case identifying a preferred option for developing, constructing, owning and operating the Facilities; (d) if part of the preferred option, to facilitate the development, financing, and construction of the Facilities; and (e) if part of the preferred option, to provide for the on -going operation and maintenance of the Facilities. ARTICLE 3 CREATION OF A MUNICIPAL GAS UTILITY 3.1 Creation of a Municipal Gas Utility. The Participants agree to cooperate to create a Municipal Gas Utility. Prior to creating the Municipal Gas Utility, in accordance with the requirements of the Ontario Municipal Act and Ontario Energy Board Act, each of the Participants must: (a) adopt a business case study; (b) if not already in place, adopt and maintain policies on asset transfers to corporations; and (c) consult with the public about the proposal to establish the Municipal Gas Utility. 3.2 Cooperation. The Participants agree to cooperate to prepare a budget for, and once the budget is approved, to proceed with the following initiatives: (a) Feasibility Study. The Participants will jointly undertake a detailed technical feasibility study exploring the options associated with constructing, owning and operating the Facilities (the "Feasibility Study "). The Feasibility Study will establish a definitive technical design for each option studied and will consider technical, legal and economic feasibility of each of the options. The Participants will use commercially reasonable efforts to deliver the Feasibility Study by May 20, 2014. (b) Business Case. Upon completion of the Feasibility Study, the Participants will jointly undertake a detailed business case analysis to compare the advantages and disadvantages associated with each of the options explored in the feasibility study phase (the "Business Case "). The Business Case will recommend a preferred option, an implementation plan, and will outline the anticipated costs associated with pursuing the preferred option and sources of funds to finance the - 3 - pursuit of such preferred option. The Participants will use commercially reasonable efforts to deliver the Business Case by June 20, 2014. (c) Asset Transfer Policies. Each of the Participants will confirm in writing that it has adopted and maintain policies on asset transfers to corporations. If no such policies are in place for a Participant, that Participant will use commercially reasonable efforts to establish such policies by June 20, 2014. (d) Public, First Nation & Metis Consultations. Upon completion of the Feasibility Study and the Business Case, the Participants will engage in public, First Nation and Metis consultations about the proposal to establish the Municipal Gas Utility. The Participants will coordinate the information presented at such consultations and the timing of such consultations and will use commercial reasonable efforts to conduct public consultations. (e) Adopting the Business Case. Participants that wish to participate in the formation of the Municipal Gas utility must adopt the Business Case by the date that is no later than sixty (60) days after the completion of the Business Case and the public consultations. (f) Creation of the Municipal Gas Utility. Following the expiry of the period described in Subsection (e), the Participants that adopted the Business Case agree to create a Municipal Gas Utility. All records, reports and information prepared pursuant to this Agreement will be deemed to be the property of, and the Confidential Information of, the Municipal Gas Utility immediately upon its creation. 3.3 Advisors. The Participants agree to jointly retain the following third party advisors to support the initiatives described in this Agreement: (a) Technical Advisors: recommendations forthcoming from Borden Ladner Gervais LLP; (b) Economic advisor: Dr. Larry Murphy; and (c) Legal advisor: Mr. Mark Rodger of Borden Ladner Gervais LLP. 3.4 Expenses. The Participants agree to develop a timeline and budget to undertake the initiatives described herein and that they will each be equally responsible for paying of all documented third party costs and expenses incurred in connection with this Agreement up to and including the final preparation and adoption of the Business Case ( "Phase 1"). Each of the Participants will fund its own costs and expenses incurred in connection with this Agreement other than Phase 1 third party costs and expenses. The Participants agree to advance funds as needed to fund any Phase 1 third party work in connection with this Agreement. -4- 1 Each Participant shall pay its portion of all invoices received from third parties pursuant to this Agreement within thirty [30] days of the date of such invoice. ARTICLE 4 CREATION OF A HOLDING COMPANY 4.1 Creation of a Holding Company. Concurrently with the creation of the Municipal Gas Utility, the Participants will create a jointly owned municipal services corporation pursuant to Section 203 of the Municipal Act, 2001, as amended ( "HoldCo "). HoldCo will be the sole shareholder of the Municipal Gas Utility. 4.2 Ownership of HoldCo. Each of the Participants who adopt the Business Case in accordance with Section 3.2(e) above will own a direct interest in the shares of HoldCo. Assuming all three Participants adopt the Business Case, the following percentages would be determined at that time: Participant Ownership interest in HoldCo Kincardine Arran - Elderslie tkOtd Huron - Kinloss DI 1 41 4.3 Governance. The Participants will establish a mutually agreeable governance structure for the Municipal Gas Utility and HoldCo, including the negotiation of a Shareholders' Agreement. The key aspects of the governance arrangements that need to be addressed are identified in Appendix "A ". ail i 1` ARTICLE 5 4,1 �"''� TERM AND TERMINATION 1 5.1 Term. This Agreement shall become effective as of the Effective Date and shall + tlne.evud v4- Phas 1 uF the, nai-u -cl ru In at 'I at' ae, 5.2 Termination. Any Participant may terminate its participation in this Agreement for convenience by providing sixty (60) days prior written notice to all other Participants. Upon such a termination, the Participant shall pay for its portion of all third party services provided to the effective date of termination. To the extent that payments by the Participant to that time exceed the amounts owing, the remaining Participants shall provide a refund of such differential. -5- 5.3 Exclusive Dealings. The Participants agree to deal exclusively with the other Participants in respect of the initiatives described in this Agreement. ARTICLE 6 CONFIDENTIALITY 6.1 Confidential Information. For the purposes of this Agreement, "Confidential Information" means any and all material, data and information documented, stored or communicated in any manner whatsoever of the disclosing Participant (the "Discloser "), which has been or will be obtained, received, transmitted, processed, stored, archived or maintained or will come into the possession or knowledge of the receiving Participant (the "Recipient ") in connection with or as a result of entering into this Agreement including, but not limited to each Participant's information, plans and operations, tools and methodologies, trade secrets, research and development, or business affairs. Each of the Participants shall be deemed to be the Recipient of any information jointly developed pursuant to this Agreement, including the Feasibility Study and the Business Case, and the other two Participants shall be deemed to be the Disclosers. Recipient acknowledges that all Confidential Information consists of confidential and proprietary information of Discloser and that Recipient shall not acquire any rights therein except as expressly set out in this Agreement. Except as required by law, rule, regulation, governmental authority or court order, Recipient shall not use, disclose, make available, sell, transfer or otherwise transmit any Confidential Information other than for the exercise of rights or the performance of obligations under this Agreement, and Recipient agrees not to use, disclose, make available, sell, transfer or otherwise transmit any Confidential Information to any person other than employees, agents and permitted contractors of Recipient who reasonably need to know the Confidential Information in connection with the exercise of rights or the performance of obligations under this Agreement or any other agreement between Discloser and Recipient and which employees, agents and permitted contractors are bound to protect the received Confidential Information from unauthorized use, disclosure, availability, sale, transfer or transmission under the terms of a written agreement with Recipient. Recipient shall not be obligated pursuant to this Section with respect to information which is publicly available without restriction through no fault of Recipient, or which is required to be disclosed by law, rule, regulation, governmental authority or court order. Recipient shall use the same degree of care to protect the Discloser's Confidential Information as it uses for its own Confidential Information, but in no event less than reasonable care. ARTICLE 7 REPRESENTATIVES AND NOTICES 7.1 Participant Representatives. Each of the Participants shall, by written notice delivered to all other Participant Representatives, appoint, from time to time, a representative (a "Participant Representative "), who shall be duly authorized -6- . . sial" 4 K, '� 2'\ to act on behalf of the Participant that has made the appointment, and with 1 4" whom the other Participants may consult at all reasonable times,. zrzi=rease Kr _.. -_ _ Unless otherwise appointed as set out herein, the Participant Representatives shall be as follows: Kincardine Name: Larry Kraemer Title: Mayor Phone: 519- 396 -3468 Email: mayor @kincardine.net Arran - Elderslie Name: Paul Eagleson Title: Mayor Phone: 519- 934 -2210 Email: areld @bmts.com Huron - Kinloss Name: Mitch Twolan Title: Mayor Phone: 519- 395 -0717 Email: mitch@lakerangerealty.ca 7.2 Notices. All notices pertaining to this Agreement not explicitly permitted to be in a form other than writing shall be in writing and shall be addressed to each Participant Representative as follows: If to Kincardine: 1475 Concession 5 RR #5 -7- Kincardine, ON N2Z 2X6 If to Arran - Elderslie: P.O. Box 70 1925 Bruce Road #10 Chesley, ON NOG 1L0 If to Huron - Kinloss: 21 Queen Street P.O. Box 130 Ripley, ON NOG 2R0 Any Participant may, by written notice to the other Participants, change its respective Participant Representative in accordance with Section [5.1] or the address to which notices are to be sent. Notice delivered or transmitted as provided above shall be deemed to have been given and received on the day it is received or transmitted, provided that it is received or transmitted on a business day prior to 5:00 p.m. local time in the place of receipt. Otherwise such notice shall be deemed to have been given and received on the next following business day. ARTICLE 8 MISCELLANEOUS 8.1 The headings in this Agreement shall not be considered in interpreting the text. 8.2 In this Agreement words importing the singular include the plural and vice versa; words importing the masculine gender include the feminine and vice versa; and words importing persons include firms or corporations and vice versa. 8.3 This Agreement and the rights and obligations of the Participants and [Company] are subject to all present and future laws, rules, regulations and orders of any legislative body or duly constituted authority now or hereafter having or purporting to have jurisdiction. 8.4 This Agreement shall be construed in accordance with the laws of the Province of Ontario. 8.5 No waiver by or on behalf of any party hereto of any breach of a provision of this Agreement shall be binding upon that party unless it is expressed in writing and duly executed by that party or signed by its fully authorized representatives, and such a waiver shall not operate as a waiver of any future breach, whether of a like or different character. -8- 8.6 The parties hereto shall from time to time and at all times do all such further acts and execute and deliver all such further deeds and documents as shall be reasonably required in order fully to perform and carry out the terms of this Agreement. 8.7 The parties hereto have expressed herein their entire understanding and agreement concerning the subject matter of this Agreement and no implied covenant, condition, term or reservation shall be read into this Agreement relating to or concerning such subject matter. 8.8 This Agreement shall enure to the benefit of and be binding upon the parties hereto and their respective successors and assigns. 8.9 Time is of the essence of this Agreement. 8.10 No amendment or variation of the provisions of this Agreement shall be binding upon any party unless it is evidenced in writing, executed by the party. 8.11 The rights, duties, obligations and liabilities of the parties hereto shall be several and not joint or collective. 8.12 Nothing herein contained shall be construed as creating a partnership of any kind or as imposing upon any party hereto any partnership duty, obligation or liability to any other party hereto. 8.13 This Agreement may be executed in several counterparts, each of which so executed shall be deemed to be an original, and all such counterparts together constitute the one and the same agreement. IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the day and year first above written. THE CORPORATION OF THE MUNICIPALITY OF KINCARDINE r - Per: at& ayor L Kramer Per: "L� Murray Clarke Chief Administrative Officer -9- THE CORPORATION OF THE MUNICIPALITY OF ARRAN - ELDERSLIE Per: ` ■) . yo 2% . ul 1 eson /1<: c c C &-_ Pe ' • ' ouse Clerk- Administrator THE CORPORATION OF THE TOWNSHIP OF HURON - KINLOSS Per: ---- )/ - 1.,.. Mayor Mitch Twolan ,/ Per: /1 IP C/ Mary Rose Walden Administrator TOR01: 5473553: v5 - 10 - SCHEDULE "A" r { GOVERNANCE CHECKLIST k " ": D• 1 f k f ([ f s "c C� as f3 f f.t f ur, 1f a