A Developer’s Perspective on Financing Brownfield Projects: A Change in Lender’s Attitude? Presented by Dan Paris, Acting CEO REM Tech 2006, Banff, AB October 11, 2006

REM Tech 2006, Banff, AB Introduction attitudes Have lenders’ attitudes changed towards brownfield remediation? more readily available Is brownfield financing more readily available? strategies What strategies will help secure debt financing more easily?

REM Tech 2006, Banff, AB Cochrane Project (Domtar Lands), Cochrane, AB

REM Tech 2006, Banff, AB Cochrane Project (Domtar Lands), Cochrane, AB Development highlights: 68 Acre site: subdivided into 39 new lots 25% residential, 40% commercial, 35% light industrial New site services & streets Phase 1: Remediation & Shopping Center Phase 2 & 3: Bal. of remediation, roads & services

REM Tech 2006, Banff, AB Cochrane Project (Domtar Lands), Cochrane, AB Remediation highlights: Former Domtar railway tie-dipping facility Creosote soil contamination in several hot spots Hydrocarbon soil contamination at shallow depth throughout site Groundwater issues Air quality issues during remediation

REM Tech 2006, Banff, AB Cochrane Project (Domtar Lands), Cochrane, AB Approvals & Remediation Process: Domtar lands acquired by Conor Pacific (in JV with Urbanex Development Corp.) Approvals: 1997 site investigation; 1999 received AIP; 2000 received C of C for Phase 1 lands Phase 1 Remediation (“dig & dump”); Phase 2 & 3 Remediation (not yet started) Complex municipal approvals inextricably tied directly to Alberta Environment approval

REM Tech 2006, Banff, AB Cochrane Project (Domtar Lands), Cochrane, AB Financing issues: Negative land value: Domtar paid us to clean site and take title & liability Laurentian Bank: only lender to issue commitment Tranche A ($3M): Soft costs & Ph. 1 remediation; Tranche B ($7.5M): bal. of Ph.1 services & Shg. Ctr. Key conditions precedent: 1) Cost Cap & PLL insurance ($600K) in place prior to funding Tr. A; 2) Ph.1 C of C required before funding Tr. B

REM Tech 2006, Banff, AB Dockside Green, Victoria, BC (cont.)

REM Tech 2006, Banff, AB Dockside Green, Victoria, BC Development highlights: 1.3M sq. ft. building area over 10 years 70% residential, 30% ind’l/office/retail/other LEED Platinum commitment Biomass wood-waste gasif’n & central H/W On-site waste water & sewage treatment

REM Tech 2006, Banff, AB Dockside Green, Victoria, BC (cont.) Remediation highlights: Excavation and off-site thermal desorption & disposal of Hazardous Waste material Thermal desorption material mixed with GVRD biosolids; used to fill Similkameen Coal Mine Risk-assessed on-site storage & capping of Contaminated Materials below buildings & greenbelt Risk-assessment program tied to LEED Platinum commitment

REM Tech 2006, Banff, AB Dockside Green, Victoria, BC (cont.) Approvals & Remediation Process: City of Victoria lands: 1999 site investigation; 2000 received AIP; 2001 Remediation Agreement Princess Mary lands: COC on some areas, AIP on balance in 2005 Quantum Environmental: took over consulting & contracting scope for Dockside Green; secured revised AIP’s in 2005 and 2006 Quantum will complete risk-assessed remediation in late 2006

REM Tech 2006, Banff, AB Dockside Green, Victoria, BC (cont.) Financing highlights: Land loan: pre-remediation (secured w/ clean site) Ph. 1 construction loan: 60% loan-to-value (approx. 15% equity required) Repaid share of land loan, 50% of soft costs, 100% of construction, financing & marketing costs Condition precedents: 1) AIP (rather than C of C); 2) 75% of constr’n costs fixed; 3) 50% pre-sales; 4) many, many covenants & guarantees

REM Tech 2006, Banff, AB Lender’s Issues are Changing Issues < > 2005 Enviro. ApprovalsC of C AIP Remed’n Fin’gEquityDebt LegislationUncertaintyNegotiated“Polluter Pays” CommitmentAfter remed’nBefore remed’n CostsFixed Good Estimate LandAbundant Limited

REM Tech 2006, Banff, AB Lender’s Issues are Changing (cont.) Issues < > 2005 InsuranceDidn’t existRequiredNot required TechnologyLimitedIncreasingMany options Gov’t financingNone Grants / loans TimelineLong Short Lender knowledgeNoneLimitedGood

REM Tech 2006, Banff, AB Strategies for Securing Remediation Financing Approvals: AIP in place or pending approval (C of C not req’d) Municipal rezoning, subdivision & DP in place (or pending); provincial & federal approvals for non remediation issues If land owned by City or Province, can get AIP more easily than if owned by private developer Support of local & environmental community (to avoid legal issues, such as injunctions, etc)

REM Tech 2006, Banff, AB Strategies for Securing Remediation Financing Development Plan & Business Case: Well laid-out case in writing & in plan Detailed cost estimates (not necessarily fixed) Covenants & guarantees: expect many Track record: developer, consultants, contractor

REM Tech 2006, Banff, AB Strategies for Securing Remediation Financing Development Plan & Business Case: Land: free & clear of encumbrances (or undertaking to clear title) Marketing: complete (or at least hit pre-sale req’t) Insurance: only if req’d by lender Exit plan: determine post-remediation value and establish why lift in value is worth funding risk

REM Tech 2006, Banff, AB What’s Next? Lender’s attitudes will continue to shift Legislation will continue to improve and case law will more clearly define liability, responsibility & recourse Approval process is becoming more streamlined and regularized Out of “Innovation” stage and into “Early Adopter” stage: less resistance, more acceptance Land is running out: “do it” or lose business

THANK YOU Dan Paris, Acting CEO REM Tech 2006, Banff, AB October 11, 2006 REM Tech 2006, Banff, AB