communityinvestmentwithhydroonead

Community Investment with Hydro One Read this flyer to learn more about:

ECONOMIC DEVELOPMENT BENEFITS NEW JOBS COMING TO ORILLIA LOWER DISTRIBUTION DELIVERY RATES

HOW THIS BENEFITS YOU!

TWO PUBLIC INFORMATION SESSIONS (For City of Orillia residents and business owners)

Thursday, September 29, 2016 Orillia City Centre, Council Chamber 50 Andrew St. S.

2 - 4 p.m. or 7 - 9 p.m.

Control room at the Ontario Grid Control Centre.

Visit orillia.ca/techhub for more information or contact the Mayor’s Office at 705-325-2447.

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How we got to where we are today • September 2015 – Orillia Council announced it was entering into negotiations with Hydro One on an opportunity that would have Hydro One locating an Advanced Technology Hub in West Orillia and purchasing the Orillia Power Distribution Corporation.

• Council endorsed negotiations based on a set of principles.

• Council held two formal public consultations (January 2016 and June 2016) to enable the public to ask questions and provide comments.

• Mayor Clarke spoke to dozens of community groups about the opportunity and numerous ward meetings were held throughout the year with this topic being discussed.

• Council Members were updated in detail about the transaction throughout the negotiations.

• Orillia Power Corporation Board of Directors voted in favour of the deal on Aug. 12, 2016.

• Council voted in favour of the deal and agreements were signed by the City of Orillia, Orillia Power Corporation and Hydro One on Aug. 15, 2016.

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-KIM FEDDERSON, PRINCIPLE OF LAKEHEAD UNIVERSIT Y’S ORILLIA C AMPUS

As a business owner in the City of Orillia I couldn’t be more pleased with Council on brokering the Hydro One deal.

Orillia will feel the economic spin-offs for years to come through the creation of new, high-quality jobs and improved technology infrastructure in Orillia. Orillians should be proud that our City was solicited by Hydro One for these new facilities. More so, we should be proud of our Council and Mayor for being progressive and truly keeping in mind what is best for our City. Bravo Orillia.”

-GREG MORTON, PRESIDENT OF MORTON METALS

Lakehead University looks forward to working with Hydro One as it establishes a presence in the City of Orillia, and we are particularly excited about its plans to build an Advanced Technology Hub across from the Orillia Campus.

We look forward to exploring how our two institutions might establish mutually beneficial collaborations; for example, potential research projects, teaching opportunities for Hydro One employees, co-op and field placement opportunities for our students, and much more.

Of special note, Lakehead will begin offering an undergraduate electrical engineering program, in concert with our partner Georgian College in the fall of 2017, and we hope that the establishment of this program will afford a host of other opportunities for future collaboration between Lakehead and Hydro One.”

Mayo Schmidt, President & CEO of Hydro One Limited, and City of Orillia Mayor Steve Clarke shake hands in front of the City of Orillia Coat of Arms following the signing of agreements on Aug. 15, 2016.

How we met all of our negotiating principles Negotiating Principles

Outcomes

Provides real short and long-term economic development benefits for the community through significant investment, including the creation of new, highly-skilled, knowledge-based jobs and potential spin-off benefits.

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Provides a multi-year window of price stability on the cost of power distribution.

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Protects the interests of Orillia Power customers and the Orillia community.

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Sees Hydro One working with the City to protect Orillia Power Distribution Corporation (OPDC) jobs.

The City of Orillia will retain ownership of Orillia Power Generation Corporation (OPGC), including the annual dividend.

Recognizes the full value of the Orillia Power distribution system – and that value will be independently valued by a qualified third party.

Sustains the level of philanthropic support provided by OPDC to the community.

Provides significant value and ongoing financial returns for the City.

$200 to $300 million investment – one of the largest in the City’s history.

Construction of three buildings estimated at more than $150 million.

The construction of the Back-up Ontario Grid Control Centre/Integrated Systems Operation Centre (ISOC) will require Hydro One to upgrade fibre optics in the area.

Employees at the Hydro One facilities are expected to receive a cumulative $30 million in payroll/incomes that will be injected into the Orillia economy year after year.

Distribution delivery rates will be reduced by 1% and guaranteed for a period of five years (distribution accounts for approximately 20% of the overall electricity bill).

Rate reduction as noted above.

Hydro One urban service levels in areas similar to the City of Orillia are comparable to Orillia Power service levels.

Large annual increase to municipal tax assessment, economic development spin-off benefits; new, high-quality job creation.

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All OPDC employees are moving to Hydro One at similar compensation, benefits, life insurance etc., provided by Hydro One.

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City retains complete ownership of Orillia Power Generation along with annual dividend to the City.

OPGC employees will not be transferred to Hydro One. $26.35 million purchase price for the shares of Orillia Power Distribution; this is more than twice their current book value validated by an accredited third party.

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Hydro One will continue to participate in community events and economic development in the City of Orillia with its own programs.

Approximately $36 million will be deposited into a Legacy Fund and generate investment income for years to come.

Hydro One will contribute $250,000 towards a community project to be jointly selected with the City.

Visit orillia.ca/techhub for more information or contact the Mayor’s Office at 705-325-2447.

How does this deal benefit you?

• Increased municipal tax assessment contributed by Hydro One through annual taxes paid to the City helps • relieve the overall tax burden on residents.

• Lower distribution delivery rates for five years (accounts for approximately 20% of your overall bill). After five years, distribution delivery rates can • only rise at a gradual level as approved by the OEB. • Strengthens the local economy, bringing more jobs to Orillia and creat-

ing spin-off benefits that improve the overall quality of life in Orillia.

Approximately $36 million deposited into a Legacy Fund will generate investment income for years to come, which will help pay for necessary improvements throughout the City.

Upgrade to fibre optics in the Orillia area should open up opportunities to attract other businesses and suppliers to the area.

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The Hydro One investment will contribute to Quality of Life in Orillia through the creation of local jobs and an increased tax base. It will attract skilled labour, and offer growth for those members of the Orillia workforce seeking a foothold in a vibrant energy sector that will thrive in the community.”

- MIKE TAYLOR, PRESIDENT MUSKOK A HALIB URTON ORILLIA – THE L AKELANDS ASSOCIATION OF REALTORS®

What does $150 million in construction look like?

Construction cost of the three Hydro One buildings within the Horne Business Park is estimated at more than $150 million.

To put that in perspective, the City’s six largest construction projects in recent history equal less than that.

Rotary Place $26 million

Library $23 million

Back-up Ontario Grid Control Centre/ ISOC

Fire Station 1 $9 million

Waste Port of Orillia Diversion Site $2.3 million $1.2 million

Provincial Warehouse

Recreation Facility $52.8 million

= $150 = million

$114.3 million

Regional Operations Centre

Frequently Asked Questions (more FAQs available at orillia.ca/techhub) What is Hydro One planning to build within the Horne Business Park?

Hydro One intends, subject to Ontario Energy Board (OEB) approval, to build three facilities within the Horne Business Park in West Orillia.

• Back-up Ontario Grid Control Centre/Integrated Systems Operation Centre (ISOC) on 16.41 acres of land.

• Provincial Warehouse on 10 acres of land.

• Regional Operations Centre on 10 acres of land.

Hydro One has purchased 16.41 acres of the land required to build the ISOC portion of the development for approximately $3 million – validated as fair market value by a third-party valuator. Construction of the buildings is estimated at more than $150 million. The construction of the ISOC will require an upgrade to fibre optics in the area.

What are the economic benefits of this deal to the City of Orillia?

Hydro One plans to build three facilities in Orillia as detailed above. Some of the jobs located in the new facilities will be transferred from the existing Orillia Power Distribution Corporation facilities. Hydro One will also introduce a significant number of entirely new, high-quality, knowledge-based jobs to Orillia, along with construction/trades jobs for the development.

In the short term, the economic impact of the construction of the buildings and related activity is anticipated to inject $200 to $300 million into the Orillia economy. Once all the facilities are operational, employees at

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The Orillia District Construction Association is supportive of any significant project which will positively impact the community as a whole.

The jobs created through this development will result in new home construction, renovations and spin-off benefits to the local construction industry.”

-CR AIG BASAR ABA, PRESIDENT OF THE ORILLIA DISTRIC T CONSTRUC TION ASSOCIATION

this Orillia facility are expected to receive a cumulative $30 million in payroll/incomes that will be injected into the Orillia economy year after year. This will result in economic spin-offs through the creation of new jobs and additional spending in housing construction, retail, restaurants, personal services (i.e. dentists, taxis), schools and colleges, and many other fields throughout the Orillia economy.

Additionally, this technology investment

by Hydro One will likely create improved infrastructure for other businesses, open up opportunities to entice investment in related businesses and suppliers, and send a signal to other corporate entities that Orillia is a great place to build a technology platform.

system and its ability to be restored promptly during and after a storm event.

There are many hundreds of miles of wires and poles scattered over large distances in the surrounding townships. It takes Orillia Power workers 11 minutes to get from one end of Orillia to the other, with switches required to restore power located extremely close together. Orillia has the ability for a quick recovery; rural settings do not.

What happens to existing Orillia Power Distribution Corporation employees?

All OPDC employees will be transferred to Hydro One and will receive a one-year location guarantee. Compensation, penWhat happens to Orillia Power Generation sions, benefits, life insurance etc. for these Corporation? employees will continue with similar terms This deal has no impact on the employment provided by Hydro One. Until the Regional of Orillia Power Generation Corporation Operations Centre is constructed, Hydro One employees. The generation side of Orillia will be situated in the existing OPDC building Power is still owned by the City of Orillia along on West Street. with the annual dividend, which accounts for the majority of the overall Orillia Power How will this deal affect dividend received by the City. Orillia Power generation jobs are not impacted. Once the my electricity rates?

OEB has approved the sale of OPDC, the generation company will relocate to a It is important to acknowledge that different facility in Orillia. the infrastructure of Orillia Power will need upgrading over the next decade What will happen to service levels once I – a cost that would likely have driven become a Hydro One customer?

Orillia Power distribution rates up by Ultimately, the service activity would remain almost 10% over the next number of the same within Orillia’s boundaries should years. Upon closing, which requires Hydro One acquire the distribution side of OrilOntario Energy Board approval, Hydro lia Power. At the public information session on One will lower distribution delivery Jan. 12, 2016, Hydro One representatives made rates by 1% and guarantee that rate it very clear that the people serving Orillia reduction for a period of five years – this today from Orillia Power will likely be the same will keep distribution rates lower for people serving you should a deal go through.

Orillians on the 20% portion of the bill That is certainly the case now that we know that is within the power of distribution that all Orillia Power Distribution employees companies to control. are guaranteed employment and a one-year The cost of electricity (that is delivered location guarantee with Hydro One. through the wires by the distribution As for service levels, Orillia is often compared system) is not determined locally, and is to surrounding townships serviced by Hybased on market costs at the provincial dro One. It is important to understand the level. This is the case now, and will be distinction and challenges between the case after Orillia transfers its distriservicing rural areas, such as the townships, bution system to Hydro One. For more versus urban areas, such as the City of Orillia. on how electricity rates are set in OntarRural areas experience much more inclemio visit www.ontarioenergyboard.ca. ent and extreme weather compared to urban centres, which impacts the distribution ...FAQs continued on next page

...FAQs continued from previous page How much is the City making from the sale of the distribution assets of Orillia Power?

The total value of the deal is approximately $36 million. Hydro One will pay the City of Orillia $26.35 million cash for the shares of OPDC; this is more than twice their current book value. The City also holds $9.7 million in OPDC debt, which will be returned to the City at the close of the transaction.

What is the City of Orillia doing with proceeds from the sale?

All proceeds from the sale (approximately $36 million) will be invested into a (perpetual) Legacy Fund with the One Investment Program. The Legacy Fund will be a segregated fund containing investments in the common shares of companies having a long history of paying dividends. On an annual basis, the City would draw 95% of the income earned on the fund. This leaves the initial proceeds of the sale, plus 5% of each subsequent year’s income, as the principal amount in the fund. Because the principal will be growing each year, it is expected that the income earned on the

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As a business owner committed to the long-term well-being of our community, I am thrilled to see a corporate investment of this magnitude being made in Orillia, which will in turn make our entire community more prosperous.”

- JIM WILSON, OWNER OF JIM WILSON CHE VROLET B UICK GMC

principal will grow each year. The annual return on this investment will likely be greater than the OPDC portion of the annual dividend provided by Orillia Power. Investing the proceeds into the Legacy Fund removes the temptation of future Councils to simply spend the principal amount on a current or future project.

UPDATE: Hydro One submits Site Plan Approval application for ISOC All Agreements with respect to the Hydro One matter were executed by the City of Orillia, Orillia Power and Hydro One on Aug. 15, 2016. City staff continue to work with Hydro One in order to ensure that all of the proposed facilities will be located within Orillia in accordance with the agreements that have been executed. City staff have

Agreements signed

Hydro One purchases 16.41 acres of land for ISOC

met with Hydro One’s consulting team that is working on the ISOC facility, and a formal (required) pre-consultation meeting has taken place. A Site Plan Approval application for the ISOC facility was submitted on Sept. 13. It is anticipated that all of the Hydro One facilities will be constructed within five years of receiving OEB approval.

OEB approval (up to one year)

45 days to submit MAAD* application

Closing

Are there guarantees that ensure Hydro One will follow through on their plans?

The electricity industry is a highlyregulated industry and the acquisition of OPDC and the construction of the Back-up Ontario Grid Control Centre/Integrated System Operations Centre (ISOC) are contingent on OEB approval. Hydro One does not have the authority to speak on behalf of or bind the OEB to a decision; therefore, there is no guarantee contained within the signed agreements. However, Hydro One officials have expressed confidence they will proceed with the development plans because there is a documented need for these facilities in Ontario. Hydro One has also demonstrated their commitment by purchasing 16.41 acres of land within the Horne Business Park for approximately $3 million to accommodate the ISOC building pending OEB approval.

Upon OEB approval of the sale of OPDC to Hydro One, and as soon as suitable sites are available in the Horne Business Park, Hydro One will move forward with the Provincial Warehouse and the Regional Operations Centre developments.

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The scale of the unique investment that Hydro One intends to make in Orillia opens up the door to significant economic development opportunities for our community and had to be pursued. Orillia Council has evaluated this deal thoroughly and is represented by the best energy lawyer in all of Ontario to ensure Orillia’s interests are well protected. I look forward to the economic spin-off benefits this deal will bring to the Orillia area.”

- DOUG DOWNE Y, DOWNE Y TORNOSKY LASSALINE & TIMPANO LAW

MORE BIG NEWS FOR THE CITY OF ORILLIA Costco is coming to Orillia • Construction has started on Costco’s 156,000-sq.ft retail warehouse, gas bar, propane station and seasonal garden centre.

• Located on University Avenue across from Diana Drive.

• Will employ approximately 250 full and part-time workers.

• The opening of Costco will help solidify Orillia as a regional retail hub in the area, drawing shoppers from across the greater region including Muskoka to the north, Lindsay to the east, and Midland to the west.

• Opening date to be determined.

City Council awards recreation tender to The Atlas Corporation • Council awarded the construction of the Orillia Recreation Facility at 255 West St. S. to The Atlas Corporation for $48,450,000.

• The Orillia Recreation Facility project includes an aquatic centre (lap pool, leisure pool, and therapy pool), gymnasiums, multi-purpose rooms, a walking/jogging track, Orillia Sport Hall of Fame, preschool room, office space and a fitness centre.

• Contractor is on site and site preparation is underway.

• Scheduled to open in 2018.

Orillia announced as host of the 2018 Ontario Winter Games

• The Ministry of Tourism, Culture and Sport announced the City of Orillia as the host of the 2018 Ontario Winter Games.

• The Games will attract more than 3,000 athletes, competing in approximately 25 sports over the four-day event.

• The City is partnering with Oro-Medonte, Gravenhurst, Midland, Chippewas of Rama First Nation, Huntsville, Tourism Simcoe County and Ontario’s Lake Country.

• The City will receive $1 million in provincial funding through a hosting grant, which includes a $100,000 deficit guarantee and/or legacy fund.

PROJECTS COMING UP SOON...

• Hwy 12/West Orillia roadworks • Orillia Waterfront Centre • Hwy 11/Old Barrie Road Intersection • Tertiary Treatment Facility Improvement

Visit orillia.ca/majorprojects for more information.