Remaining meeting materials, bylaws text and appendices

SSL Water Servicing for the Glenshire/Langshire District

20230221 - Council Report

Background

Recognizing that this issue would require deeper analysis to formalize agreements/bylaws and to quantify the exact costs and scope of infrastructure needed, and given time constraints associated with the New Building Canada Infrastructure Grant, the City and SSL entered into a MOU in June of 2016 whereby SSL agreed to expand its water service subject to eventual resolution of the above (among other issues, which have now been resolved).

In 2017, the CRD amended the necessary bylaw to reflect the new water service area. Starting in 2017, SSL began providing water to properties within the Glenshire/Langshire district and on the basis that the 2016 MOU items would be honoured in a reasonable timeframe. From 2017 to present, the City has approved developments on ten properties in the Langshire/Glenshire District that are now connected to the SSL water system. A further seven properties in the Langshire/Glenshire District have yet to connect to the SSL water service (though many want to do so in the very near future).

While SSL is ultimately willing to allow for these remaining properties to connect to the SSL water system, it is unwilling to do so until the outstanding cost recovery matters related to the 2016 MOU are resolved.

COMMENTARY

The 2016 MOU

In 2016, the City and SSL entered into the attached MOU. The key outstanding term of the MOU is as follows:

3. As a condition of number 1, above, make any necessary amendments to City bylaws as are necessary to ensure that neither the City nor SSL are made to unfairly subsidize future capital costs and system upgrades necessitated by expansion of the Water Service Area and SSLs operation of the New System.

Given that the MOU was signed in 2016 and works have taken place since then, there are two categories of costs to be discussed: past works and future works. These costs are broken out below.

Past Works

SSL is seeking to recover the proportionate share of three specific components of the water system that are part of the overall system that the whole system benefits from. Specific infrastructure components include:

• Pump Station #1: This site is the primary source of water for the entire water system, with a direct connection to the CRD’s regional transmission mains.
• Westhills Water Reservoirs: This site is the system’s central storage facility, from which all water is stored before entering the distribution network.
• Supply Main #1: This is a dedicated water supply line between Pump Station #1 and the Westhills Water Reservoirs.

The combined cost-to date (actuals) for these three components is $8,688,000, all of which has been paid by SSL and Westhills. Details of these costs are broken down in the table below.

Of these total costs, 15% or $1,303,200 (rounded to $1,300,000) is proposed to be applied to the properties in the Glenshire/Langshire district, which represent 15% of the developable area of the entire (expanded) SSL water system. Details on the 15% are as follows:

• The expanded SSL water area is 369 developable acres (including roads in the original area only but excluding roads in the Glenshire/Langshire District and excluding the total area that is required to be dedicated as park/open space).
• The developable area of the Glenshire/Langshire district is 56 developable acres, representing 15% of the expanded SSL water area.

Cost Breakdown of Past Works

Future Works

In 2018, updated engineering data revealed the need for further water system upgrades to improve fire flows within the Glenshire/Langshire district, including:

• Additional valve work at the Westhills Reservoir site;
• Cross-connecting two water mains halfway down the West Shore Parkway; and
• Installing a PRV (Pressure Reducing Valve) near the Glenshire/Langshire border.

The cost estimate for these upgrades is $1,030,000, which includes a 20% contingency. Please see the attached January 2023 memo from On Point Project Engineers Ltd.

SSL advises that certainty on the funding and collection methodology as it relates to these future works is necessary before any further properties can connect to the SSL water system. For clarity, these needed future works are specific to the Langshire/Glenshire district and are not needed for, nor do they benefit, the original Westhills development.

Proposed Path Forward

The following summarizes the proposed path forward that would allow the unconnected properties in the Glenshire/Langshire district to access the SSL water service and to allow all properties (both connected and unconnected) to benefit from the future works upgrades:

1. Past Works: The capital costs for the past works will be applied across the connected and unconnected properties by way of a connection charge levied on their percentage of land area (approximately 10% for unconnected and 5% for connected of the entire land area of the SSL water system). For the unconnected properties, this amount will be collected and retained by SSL at such time as the property connects to the system. For the connected properties, it is proposed that the City agree to pay for the outstanding amount of $414,501 in five equal and annual payments to SSL. At such time as a connected property redevelops or upgrades their water connection, SSL will collect a connection charge from these properties and remit the connection charge related to past works to the City.

2. Future Works: The capital costs for the future works will be applied across the connected and unconnected properties by way of a connection charge levied on their percentage of land area (approximately 10% for unconnected and 5% for connected of the entire land area of the SSL water system). While the City would initially pay for the construction of the future works, the connection charged would be levied and collected by SSL prior to the unconnected properties connecting and prior to any currently connected property coming in for an updated or upsized connection. Once collected by SSL, the funds would be forwarded to the City.

It is important to note that multiple other cost recovery regimes were considered. While the approach recommended may cost the City more in the long run, it is the fairest for all property owners and is the fastest to implement, when compared to other options that have been discussed.

It is also important to note that in advance of this report coming to Council, the City sent letters via registered mail to all affected property owners and followed these letters up with phone calls / emails when contact information was known. In all, staff have had meetings / conversations with all but one of the unconnected property owners and with two connected property owners who represent four connected properties.

Servicing of Catholic Church Properties on Irwin Road

While technically unrelated, another factor to consider is that the City is also working with SSL to expand SSL's water service to capture the Catholic Church properties on Irwin Road. These properties are currently within the CRD water service area, but servicing them from the CRD system is cost-prohibitive and the CRD has indicated a willingness to allow for service from the SSL system instead. Therefore, as part of the Purchase and Sale Agreement to buy 698 Goldstream Avenue from the Catholic Church, the City committed to providing services to the Catholic Church properties on Irwin Road, including water service via SSL for an estimated capital cost of approximately $750,000. Design work for this is underway on the basis that the project will receive service from the SSL water system, with actual infrastructure to be installed later this year. While there is no financial benefit to SSL in expanding their service area to include the Church Properties, SSL is willing to accommodate this expansion, subject to the City and SSL resolving the above water servicing issues in the Glenshire/Langshire District and subject to SSL not being responsible for additional costs (current and future) associated with servicing the Catholic Church properties.

FINANCIAL IMPLICATIONS

The recommended option is a connection charge on all seventeen properties based on land area for both past and future works. Under this option, the City would initially be responsible for the full cost of the future works, specifically $1,030,000. The City would also be responsible for providing SSL with equal annual payments over a five-year term for the proportionate land area of the connected properties, totaling $414,501. The City’s total outlay would be $1,444,501.

The City would recover its costs over time. As the unconnected properties connect, the City would be reimbursed up to $701,588. As the currently connected properties need a new or upgraded service, the City would be reimbursed up to $742,914.

The timing for the recovery of the City’s costs is not known at this time; however, it is likely that in the next 1-5 years most of the unconnected properties will connect and the City will recover the full $701,588 related to those properties. The remaining $742,914 is less certain, though one of these properties is likely to upgrade this year and the City would then recover the portion of costs that relate to that property. It is entirely possible that some of the currently connected properties may never need a new or upgraded connection and in that case the City may never fully recover the full financial outlay.

Details of how much each property will need to pay under the recommended option

(Noting that these amounts will increase annually in the amount of 5% for a period of 15 years, unless the amount is paid)

Unconnected Properties

Connected Properties

LEGAL IMPLICATIONS

The attached amending agreement and amending bylaw have been reviewed by the City’s external legal counsel and have been reviewed by and agreed to by SSL.

OPTIONS

Option 1

That Council:

1. Give 1st, 2nd and 3rd reading of Bylaw No. 2127; AND
2. Direct staff to include $1,112,900 in the 2023 budget, as well as $82,900 in each of the next four years, for the past and future works as outlined in this report; AND
3. Direct staff to include $750,000 in the 2023 budget for the capital costs associated with providing water service to the Church properties; AND
4. Direct staff to negotiate the necessary agreements with Sustainable Services Ltd. for the installation of the future works in the Glenshire / Langshire Business District and for the Church properties; AND
5. Receive this report and attached amending agreement for information and direct staff to bring forward the amending agreement for approval, along with Bylaw No. 2127 for adoption, at a special meeting of Council at 7:00 p.m. on March 27th, 2023.

Option 2

THAT Council does not take any action with respect to resolving the outstanding issues described in this report.

SUBMITTED BY: Braden Hutchins, Director of Corporate Services

Concurrence:

• Yari Nielsen, Director of Parks, Recreation and Facilities
• Matthew Baldwin, MCIP, RPP, Director of Planning and Subdivision
• Katelyn Balzer, P.Eng., Director of Engineering and Public Works
• Michael Dillabaugh, CPA, CA, Director of Finance
• Marie Watmough, Deputy Director of Corporate Services
• Darren Kiedyk, Chief Administrative Officer

Attachments:

1. 2016 MOU
2. 2010 Services Agreement Between the City and SSL
3. 2022 Amending Agreement to the 2010 Services Agreement (approved last year)
4. Memo on Future Costs from On Point
5. 2019 Letter from SSL
6. 2020 Letter from SSL
7. Proposed 2023 Amending Agreement
8. Draft Bylaw No. 2127

---

Memorandum of Understanding

Extension of SSL Water Service Area (City of Langford / SSL-Sustainable Services Ltd.) Dated for reference the ___ day of ___ 2016

Between:

• SSL-Sustainable Services Ltd. ("SSL") 957 Langford Parkway Victoria, BC V9B 0A5

And:

• City of Langford (the "City") 2nd Floor, 877 Goldstream Avenue Langford, BC V9B 2X8

SSL currently operates a domestic water distribution system in the Westhills Water Service Area as shown on Schedule A. The City is in the process of constructing the completion of the West Shore Parkway and as part of this construction, the City intends to install a domestic water distribution system to serve properties in the area of West Shore Parkway and Sooke Road shown as the South West Shore Water Service Area on Schedule A (the "New System"). The City has requested that SSL take on the operation of the New System, subject to necessary approvals being given by the Capital Regional District ("CRD"). Subject to the CRD approvals being granted, SSL has agreed to take on operation of provided that agreement can be reached between SSL and the City on the following:

1. Amending the Services Agreement between the City and SSL dated April 14, 2010 (the "Services Agreement") to encompass the South West Shore Water Service Area and to include the New System and to provide for the City's construction and initial ownership of the New System, turnover of the New System to SSL, and ongoing operation and maintenance of the New System by SSL.

2. As a condition of number 1, above, amending the Services Agreement to offset any excess operational and maintenance costs to SSL that result from expansion of the Water Service Area and operation of the New System. The Parties anticipate that this may be done through a reduction in the amount of royalties payable under the Services Agreement.

3. As a condition of number 1, above, make any necessary amendments to City bylaws as are necessary to ensure that neither the City nor SSL are made to unfairly subsidize future capital costs and system upgrades necessitated by expansion of the Water Service Area and SSL's operation of the New System.

4. Working together to explore additional opportunities for expansion of SSL's Water Service Area within the City of Langford.

IN WITNESS WHEREOF, the parties have hereto by their duly authorized representatives executed this Agreement.

(Agreed to and accepted by SSL-SUSTAINABLE SERVICES LTD. and CITY OF LANGFORD)

[Note: signatures and signatory images omitted]

---

Services Agreement

Dated for reference the 14 day of April, 2010 Between:

• CITY OF LANGFORD 2nd Floor 877 Goldstream Avenue Langford, B.C. V9B 2X8
• SSL-SUSTAINABLE SERVICES LTD. (Inc. No. 0822775) Suite 219, 957 Langford Parkway Victoria, B.C. V9B 0A5

Recitals / WHEREAS

• The Capital Regional District (CRD) and Langford, by an agreement made in 2007 (the "Water Supply Agreement"), have agreed that the CRD will provide bulk water to the CRD Connection Point as defined in this Agreement, to supply to customers in the Westhills Development, which agreement contemplates that Langford may enter into an agreement with other parties with respect to water distribution downstream of the CRD Connection Point; and
• Langford has entered into an agreement with CRD (the "Interim Operating Agreement") under which CRD continues to distribute water to customers in the Westhills Water Service Area pending the execution and performance of this Agreement; and
• On April 21, 2008 SSL was incorporated to, among other objects, operate the municipal services contemplated by this Agreement; and
• The parties entered into an agreement in principle on November 15, 2008 regarding the establishment of the Langford Green Utility and the establishment of further agreements between the parties to this Agreement, under which SSL will operate certain municipal services in respect of the Westhills Development lands; and
• SSL holds a statutory right of way over the Westhills Development lands for the purpose of providing water and energy services; and
• Langford wishes to enter into an agreement under which SSL will provide the water distribution and district energy services established by the Langford Multi Utility Bylaw; and
• Langford intends to adopt a bylaw (the "Multi Utility Bylaw") establishing water and energy distribution as municipal services and authorizing service agreements with service providers to deliver water and energy services in accordance with the bylaw;

NOW THEREFORE this Agreement is evidence that, in consideration of the terms and conditions set out in the Agreement and one dollar paid by each of the parties to the other parties, the receipt and sufficiency of which each of the parties acknowledges, the parties agree as follows.

INTERPRETATION

• Definitions include Business day; Bylaw 1000; CRD Connection Point; Energy Service; SFE; Water Service; Westhills Water Service Area; Westhills Energy Service Area.

NATURE OF AGREEMENT

2. This is a partnering agreement as defined in the Community Charter. It is not an agreement granting an exclusive or limited franchise of any kind, and is not intended to make the City and any other party, or parties, joint venturers or partners with respect to any enterprise.

TERM OF AGREEMENT

3. The term of this Agreement shall commence on June 22, 2010 and continue until terminated in accordance with Sections 4 and 5.
4. Langford may terminate this Agreement in the circumstances described in Sections 40 through 42 [default] by giving written notice to SSL in accordance with those provisions.
5. SSL may terminate this Agreement by giving one year's written notice to Langford or as provided in Sections 43 and 44.

SSL TO OPERATE WATER SERVICE

6. During the term of this Agreement, SSL shall construct, own, operate and maintain as a municipal service a domestic water distribution system in the Westhills Water Service Area to provide Water Service, in accordance with the terms of this Agreement and the Multi Utility Bylaw.

7. SSL acknowledges that the CRD has enacted the following bylaws applicable in the Westhills Water Service Area, and agrees to co-operate with the CRD, in the same manner as it would if it were a member municipality of the CRD, in the administration and enforcement of the bylaws and such replacement bylaws as the CRD may enact from time to time, including by terminating the supply of water in appropriate cases:

• Capital Regional District Water Conservation Bylaw No. 1, 2008 (Bylaw No. 3061)
• Capital Regional District Cross Connection Control Bylaw No. 1, 2008 (Bylaw No. 3516)

SSL TO OPERATE DISTRICT ENERGY SERVICE

8. During the term of this Agreement, SSL shall construct, own, operate and maintain as a municipal service an energy distribution system in the Westhills Energy Service Area to create, obtain and distribute energy, and may also include the distribution of non-potable water, in accordance with the terms of this Agreement and the Multi Utility Bylaw.

PERFORMANCE STANDARDS

9. SSL shall construct, operate and maintain the Water Service and the Energy Service in accordance with the performance standards set out in Schedule C.

10. SSL shall operate a business office in Langford including a customer reception area and staff authorized to accept water and energy service connection applications, and shall make available for use outside business hours a 24-hour emergency service telephone number which shall be posted at the business office and on SSL's website.

11. When engaged in activities within Langford pursuant to this Agreement, whether on Langford highways or on private property, all employees of SSL shall carry proper identification and all vehicles owned by SSL shall display appropriate exterior signage. No employee or contractor of SSL shall enter any private property to engage in any such activity without providing reasonable identification, if requested to do so by the owner or occupier.

12. SSL shall co-operate with the CRD and Langford in making available to members of the public information on their respective responsibilities as service providers in Langford, including permitting the CRD and Langford to provide SSL's telephone number and website address in its written publications and on its website.

13. SSL shall throughout the term of this Agreement be and remain a member in good standing of B.C. One Call or such successor organization as may be established to provide a uniform means of inquiry as to the location of underground services for parties undertaking excavation work.

RATES AND RATE REVIEW

14. SSL may impose on customers of the Water Service and the Energy Service in the Westhills Service Areas such water and energy user charges, rates, and other fees and charges as are authorized by the Multi Utility Bylaw. The parties agree that the rates set will not exceed the rates set by the CRD for the Juan de Fuca region for the Water Service, and will not exceed the residential rate set by BC Hydro for the residential customers of the Energy Service. SSL must annually publish its current rate for water and energy on its website and at its offices.

15. From time to time, but not more than once in any calendar year for Water Service or in the case of rates related to the Energy Service not before an initial period of 5 years, SSL may propose to Langford changes in the rates and user charges above those authorized by the Multi Utility Bylaw, in accordance with the procedure set out in Schedule D, and Langford shall cause such proposals to be placed before the Council for its consideration.

16. No rate changes approved by the Council under Schedule D shall take effect until the Council amends the Multi Utility Bylaw or as otherwise provided under that bylaw.

17. SSL may render customer accounts for water and energy user charges and other charges imposed under this Agreement and the Multi Utility Bylaw jointly with other service charges in respect of which SSL or any related entity is the service provider.

18. SSL may request Langford to exercise its powers under the Community Charter to collect unpaid water or energy service user rates, fees and charges as taxes in arrear if, by December 31 of the year preceding the year in which Langford is to include the fees on a tax notice, SSL has provided to Langford the name and civic address of the owner of, and the legal description of, the parcel of land in respect of which the charges have been charged and remain unpaid, and the amount unpaid as of December 31 of the year in respect of which the information is being provided.

19. Langford shall remit such rates, fees and charges to SSL, net of any collection charges authorized by the Multi Utility Bylaw, within five business days of receipt, and for that purpose Langford shall be deemed not to have received any amounts paid by cheque until the cheque has cleared the bank on which it is drawn and shall be deemed not to have received any amounts in relation to tax sale proceedings until the expiry of the tax sale redemption period.

20. SSL will charge Langford as a customer at the retail water rate for water provided to any park, or water provided for the irrigation of any Langford property, but not for water provided for firefighting purposes or hydrant testing or flushing.

DRINKING WATER PROTECTION ACT REQUIREMENTS

21. SSL, in constructing, owning, operating and maintaining water distribution works so as to provide potable water, is responsible for compliance with the applicable provisions of Drinking Water Protection Act as they apply to a distributor of water, subject to the provision of Section 22.

22. The parties acknowledge that the CRD is responsible under the applicable Drinking Water Protection Act for the quality of water provided under the Water Supply Agreement to the CRD Connection Point, and SSL agrees to co-operate with the CRD in implementing water quality monitoring and reporting measures to the extent that such measures reasonably involve monitoring and reporting at or in respect of points downstream of the CRD Connection Point.

BULK WATER SUPPLY

23. SSL, on behalf of Langford, must make payments to the CRD required under Article 4.4 of the Water Supply Agreement for bulk water supplied under that agreement, within the time specified in that agreement, provided that Langford has either caused the CRD to render the monthly invoices referred to in that Article directly to SSL or has provided copies of such invoices to SSL.

24. SSL shall not install any Water Service outside the boundaries of the Westhills Water Service Area, or provide or enter into any agreement or other arrangement to supply water to any parcel of land any portion of which lies outside the Westhills Water Service Area without the prior written approval of Langford.

25. SSL acknowledges that the restriction in Section 24 is a requirement of the Water Supply Agreement, and without limiting the generality of Section 54 [general indemnity] specifically agrees to indemnify Langford in respect of any claim by the CRD or any other party arising from any breach of Section 24 by SSL or those for whom it is responsible in law.

PAYMENTS TO LANGFORD

26. SSL shall pay to Langford $100,000 on each of the following dates:

• The date of execution of this Agreement;
• The date of issuance of an occupancy permit in respect of the 100th SFE connected to the Energy Service; and
• The date of issuance of an occupancy permit in respect of the 200 SFE connected to the Energy Service.

27. SSL shall pay to Langford an amount equal to 10% of its gross revenues from Water Service customers for the provision of the Water Service, as an expense of the Water Service, including all water user charges and other charges of whatsoever nature, on a quarterly basis calculated on the basis of actual revenues received in the previous quarter, as such revenues are certified by statutory declaration made by an officer of SSL and accompanying each payment. No such payment is required during the first quarter of the term of the Agreement. For the purposes of this section, gross revenues do not include any amount which SSL may recover for capital costs. For the purposes of this section, quarters shall be from January 1 to March 31; April 1 to June 30; July 1 to September 30; and October 1 to December 31 of each year, and the first quarter of the term of this Agreement shall commence on July 1, 2010.

28. SSL shall pay to Langford an amount equal to 3% of its gross revenues from Energy Service customers for the provision of the Energy Service, as an expense of the Energy Service, including all energy user charges and other charges of whatsoever nature, on a quarterly basis calculated on the basis of actual revenues received in the previous quarter, as such revenues are certified by statutory declaration made by an officer of SSL and accompanying each payment. No such payment is required during the first quarter of the term of the Agreement.

29. At its cost, Langford may require an audit of the calculation of the amounts paid under this Agreement, and in that event SSL shall permit the auditor access to its business records at mutually convenient times. In the event that any audit determines that SSL has paid more than 5% less than it is obliged to pay under the Agreement, SSL shall reimburse Langford for the cost of the audit.

30. Langford may require an audit no more frequently than once every three years, unless a previous audit disclosed that the amounts in respect of which the audit was required had been incorrectly calculated, in which case this provision shall be suspended until an audit has disclosed that the amounts in respect of which the audit was required have been correctly calculated.

31. If SSL is subject to utility company property taxation in respect of specified improvements, as defined in s. 353 of the Local Government Act, in place of tax that might otherwise be imposed under s. 197(1)(a) of the Community Charter, the amount of any utility company property tax paid in any calendar year may be deducted from an amount payable to Langford under Section 27 or 28 (% of revenues).

CONSTRUCTION AND OWNERSHIP OF WATER DISTRIBUTION WORKS

32. Prior to the construction of any Water Service works that are intended to be used to supply potable water pursuant to this Agreement, SSL shall provide to Langford a copy of any required construction permit issued under the Drinking Water Protection Act to authorize the construction of the works.

33. On completion of construction of the Water Service works described in Section 32, the works, notwithstanding the law of fixtures, remain the property of SSL during the term of this Agreement.

34. SSL shall maintain the Water Service works comprising the Water Service it operates pursuant to this Agreement in accordance with, at a minimum, generally accepted municipal engineering standards.

LICENCE TO USE HIGHWAYS

35. Langford will grant to SSL pursuant to the Community Charter a licence to use Langford's highways and utility statutory rights of way for the operation of the Water and Energy Services, provided in the case of utility statutory rights of way that the terms of the instrument permit the use of the land for water distribution works and permit licensees of the grantee to exercise the grantee's rights. Langford also acknowledges SSL's right in, and will grant a license, for any works SSL has installed in Langford's highways and rights of ways prior to their dedication.

STATUTORY RIGHTS OF WAY FOR WORKS

36. If SSL installs Water or Energy Service works on land that is not a highway or subject to a statutory right of way in favour of Langford or SSL, it must cause the owner of the land to grant to SSL, for nominal consideration, a right of way under s. 218 of the Land Title Act, granting in perpetuity a right to operate and maintain the Water and Energy Service works and replace them from time to time.

DISPOSITION OF WORKS ON TERMINATION OF AGREEMENT

37. (1) The title to and interest in the infrastructure and business operation of the water distribution works shall pass as indicated below:

• (a) if a termination occurs as a result of the operation of section 40-42, the title to and interest in the water distribution system will pass to Langford;
• (b) if SSL terminates this Agreement within the first 5 years, as a result of the operation of sections 43 and 44, Langford must pay compensation to SSL equal to the actual costs of the infrastructure, less any depreciation, plus the market value of the business operation and title to and interest in the water distribution system will pass to Langford. If SSL terminates this Agreement after the 5th year, SSL may transfer its rights, title to and interest in the water distribution system and business operation to a third party at fair market value as a going concern, provided that Langford shall have a right of first refusal to acquire the water distribution system and business operation on the same terms and conditions as the third party. (2) If the agreement is terminated, Langford and SSL agree that SSL will continue to provide the Water Service in accordance with the Multi Utility Bylaw until Langford notifies SSL that it or a third party is able to assume the operation of the service. (3) On termination of this Agreement, the title to and interest in any and all works comprising the Energy Service shall remain with SSL and Langford agrees to permit the continued operation of the Energy Service and to regulate the energy rate and terms of services under the Multi Utility Bylaw until SSL has made application for and obtained authorization from the applicable regulatory authority for the operation of the Energy Service, if necessary.

ASSIGNMENT AND CHANGE IN CONTROL OF SSL

38. SSL shall not assign this Agreement to any party without the prior written consent of Langford which consent must be exercised reasonably. A change in control of SSL shall be deemed to be an assignment of this Agreement. For the purposes of this section, change in control means the voting control exercised directly or indirectly through beneficial ownership of more than 50% of the voting shares in the capital of the corporation, but does not include a change whereby the control of the corporation is transferred or assigned to another corporation controlled by SSL or affiliated with SSL, or a corporation which controls SSL.

EVENTS OF DEFAULT AND TERMINATION

40-44. (Detailed events of default, notice and remedies for breach by either party are specified, including Langford's rights to terminate for defaults specified in Section 40 and SSL's rights where Langford breaches per Section 43; remedies include withholding of payments, audits, termination notices and dispute resolution measures.)

DISPUTE RESOLUTION

45-48. The parties shall attempt in good faith to resolve any disputes informally; if unresolved, mediation under BCICAC Mediation Rules; if still unresolved, arbitration in Victoria under the Commercial Arbitration Act with costs borne equally by the parties.

REPRESENTATIONS AND WARRANTIES

49-50. SSL and Langford make various representations and warranties about authority, capacity, permits, compliance, financial condition, and accuracy of statements.

INSURANCE AND INDEMNITY

51-56. SSL must obtain and maintain comprehensive general liability insurance of not less than ten million dollars inclusive per occurrence, automobile liability insurance of not less than five million dollars, and equipment insurance covering all equipment "all risks". SSL and Langford indemnify each other in the circumstances described, with indemnities surviving termination for two years.

FREEDOM OF INFORMATION LEGISLATION

57. SSL acknowledges the Agreement and records are subject to the Freedom of Information and Protection of Privacy Act.

TIME OF THE ESSENCE AND FORCE MAJEURE

58-62. Time is of the essence. Force majeure provisions detailed.

GENERAL PROVISIONS

63-68. Further assurances, waivers and amendments, entire agreement clause, transition provisions, notices protocol and severability.

Schedules referenced:

• Schedule A: WESTHILLS WATER SERVICE AREA

  

• Schedule B: WESTHILLS ENERGY SERVICE AREA

  

• Schedule C: PERFORMANCE STANDARDS (response times and service standards)
• Schedule D: RATE REVIEW AND APPROVAL PROCEDURE

(Full text of Schedules C and D appears in the Agreement.)

---

AMENDING AGREEMENT NO. 1 (CON22-0017)

Dated for reference the ___ day of January 2022.

Between:

• SSL-Sustainable Services Ltd., 957 Langford Parkway, Langford BC V9B 0A5 ("SSL")
• CITY OF LANGFORD, 2nd floor, 877 Goldstream Avenue, Langford, B.C. V9B 2X8 ("City")

WHEREAS:

• Pursuant to a Services Agreement with the City, SSL operates a utility providing domestic water to customers within the Westhills Water Service Area (the "Water Service").
• As part of that Services Agreement, SSL is required to pay water royalties on a quarterly basis to the City, and SSL has paid those royalties in full up to the end of the third quarter of 2021.
• The City and SSL signed a Memorandum of Understanding on June 10, 2016 (the "MOU") under which SSL agreed to expand its service to provide water to a number of properties in what was referred to in the MOU as the South West Shore Water Service Area, which at the time lay outside of the Westhills Water Service Area (the "New Area"), provided certain conditions were met.
• As part of the MOU, the parties agreed that the Services Agreement between the City and SSL that governs the provision of water by SSL would be amended to offset any excess operational and maintenance costs that resulted from the New Area being included in the Westhills Water Service Area, and that this could be done through a reduction in the amount of royalties payable by SSL to the City.
• Having observed the operational and maintenance costs incurred by SSL with respect to the partially developed New Area, the City feels that it is appropriate to terminate the water royalties payable to the City by SSL under the Services Agreement as of the end of the third quarter of 2021.

IN CONSIDERATION of $10.00 paid by SSL to the City and other good and valuable consideration, the receipt and sufficiency of which SSL acknowledges the parties agree as follows:

1. Section 27 of the Services Agreement, and all references to section 27 in the Services Agreement are hereby deleted.
2. The deletion of section 27 and the termination of water royalty payments will be effective as of October 1, 2021.
3. All other provisions of the Services Agreement remain in full force and effect.
4. Neither the MOU, the Services Agreement, nor this Agreement impose any obligation on SSL to provide, nor continue to provide, water service to any property outside of the Westhills Water Service Area.
5. Should SSL discontinue provision of water service to property outside of the Westhills Water Service Area, the City may require a further amendment to the Services Agreement to reinstate royalty payments.

(Execution blocks omitted.)

---

On Point Project Engineers Ltd.

OPINION OF PROBABLE COST Project: 325 - Langshire - SSL System Improvements
Date estimate prepared: January 10, 2023
Prepared By: Richard Rebneris, P.Eng.
Reviewed By: Michelle Ting, EIT
Revision #: (Class C)

Estimate basis: Based on a preliminary servicing concept only and in advance of design. Costs are subject to escalation, due to material / labour shortages and supply chain disruptions.

Qualification Statement: The ENGINEER has no control over the cost of labor, materials, equipment, the contractor's method of determining prices, or over competitive bidding or market conditions. The ENGINEER cannot and does not guarantee that proposals, bids or construction costs will not vary from this opinion of probable costs.

SUMMARY OF ESTIMATED COSTS

1. Improvement #1: $102,000
2. Improvement #2: $189,500
3. Improvement #3: $560,000
   Contingency (20%): $170,300

TOTAL ESTIMATED COSTS (Rounded up nearest $10,000): $1,030,000

OPINION OF PROBABLE COST - Class C

325 - Langshire - SSL System Improvements

Improvement Number 1 - Reservoir Check Valve

Subtotal Improvement 1: $102,000

Improvement Number 2 - Westshore Parkway

Subtotal Improvement 2: $189,500

Improvement Number 3 - Langshire PRV

Subtotal Improvement 3: $560,000

Contingency (20%): $170,300

Total Estimated Cost (rounded): $1,030,000

(End of On Point opinion of probable cost)

---

AMENDMENT AGREEMENT

Dated for reference February 28, 2023

Between:

• CITY OF LANGFORD, 2nd Floor, 877 Goldstream Avenue, Langford, B.C. V9B 2X8 (“Langford”)
• SSL-SUSTAINABLE SERVICES LTD. (Inc. No. 0822775), Suite 219, 957 Langford Parkway, Victoria, B.C. V9B 0A5 (“SSL”)

WHEREAS

A. Langford and SSL entered an agreement dated for reference April 14, 2010 under which SSL provides water service to a portion of the City (the “Services Agreement”);

B. The parties wish to amend the Services Agreement to expand the service area within which SSL is obligated under the Services Agreement to provide water service and to provide for the recovery by SSL and the City of costs incurred to provide water service to properties within the expanded service area that require a new or larger connection;

C. The parties wish to provide for a payment by the City of a portion of the capital costs incurred by SSL to provide water service to properties that are located within the expanded service area and that were connected to the water system before the date of this agreement; and

D. The parties wish to set out terms on which SSL will provide water service to the Church property located at 2936, 2940 and 2941 Irwin Road (the “Church Property”).

AMENDMENTS

1. The Services Agreement is amended as follows: (a) Schedule A is replaced with the schedule attached as Appendix 1 of this Agreement; (b) The schedule shown as Appendix 2 of this Agreement is attached as Schedule E of the Services Agreement; (c) The following definitions are added to section 1:
   • PRV means certain works required to adjust pressure and fire flow availability to facilitate the provision of adequate Water Service by SSL to the Extended Service Area Properties.
   • Extended Service Area Property means a property identified as such on the map in Schedule A.
   • Extended Service Area Connection Charge means a connection charge imposed under Schedule I of the Multi Utility Bylaw in relation to an Extended Service Area Property, in the amount specified in that schedule, for the recovery of the costs incurred or to be incurred by the City for the PRV and for the recovery of costs incurred by SSL for other works that facilitate the provision of Water Service by SSL to the Extended Service Area Properties. (d) Section 14 is replaced with the following: “SSL may impose on customers of the Water Service and the Energy Service in the Westhills Service Areas such water and energy user charges, rates and other fees and charges as are authorized by the Multi-Utility Bylaw. Except as regards to Extended Service Area Connection Charges, the energy and water usage rates set will not exceed the rates set by the CRD for the Juan de Fuca region for the Water Service, and will not exceed the residential rate set by BC Hydro for the residential customers of the Energy Service. SSL must annually publish its current rate for water and energy on its website and at its offices.”; and (e) The following are added as sections 14.1 and 14.2: “14.1 SSL shall, within 30 days of the date on which an Extended Service Area Connection Charge becomes payable under the Multi Utility Bylaw, pay to the City in respect of the parcel connected the percentage of that Extended Service Area Connection Charge shown for that parcel in Table A of Schedule E. 14.2 The City acknowledges that SSL is not required to allow an Extended Service Area Property to be connected to an available water main by means of a new connection, or by means of a connection larger than a current connection to the property, unless the owner of that property has first paid to SSL the applicable Extended Service Area Connection Charge.”

PAYMENT

2. The City shall pay $82,900 to SSL on or before May 1st of 2023, on or before May 1st of each of the next three calendar years, and on or before the fourth anniversary of the date of this agreement.

CHURCH PROPERTY

3. While this agreement brings the Church Property within the water service area under the Services Agreement, SSL is obligated under that agreement to provide water service to the Church Property if, but only if, (a) the City first pays to SSL the cost of installing a pressure reducing valve, a water connection, and associated works (at a current estimated cost of approximately $750,000) to serve the Church Property and/or installs such works and (b) appropriate amendments are made to the City’s agreement with the Capital Regional District and to associated bylaws of the Regional District to remove the Church Property from the Regional District’s water service area and development cost charge regime and to permit the City and SSL to provide water service to the Church Property under the Services Agreement.

(Execution blocks omitted.)

APPENDIX 2 / SCHEDULE E

PERCENTAGE OF CONNECTION CHARGE PAYABLE TO THE CITY

Table A

Note: The percentage shown in column 2 applies to the connection of the relevant parcel shown in column 1 or of any parcel into which that parcel is subdivided.

---

CITY OF LANGFORD

BYLAW NO. 2127

A BYLAW TO AMEND BYLAW NO. 1291, “Multi-Utility Bylaw No. 1291, 2010"

The Council of the City of Langford, in open meeting assembled, hereby enacts as follows:

WHEREAS:

A. SSL-Sustainable Services Ltd. (“SSL”) provides water services on behalf of the City under an agreement with the City dated for reference April 14, 2010 (the “Water Services Agreement”);

B. The City wishes SSL to provide or to continue to provide water service through new or upsized connections to properties not currently part of the water service area to which the Water Services Agreement relates and SSL is willing to do so provided the City bears the cost of constructing certain system upgrade works to facilitate such service and provided the City amends the Multi-Utility Bylaw to impose a connection charge on the owners of properties in the area added to the original service area for the recovery by SSL of a portion of the capital costs that SSL incurred for components of the water system that benefit those properties;

C. The City wishes to impose a connection charge on properties in the extension area to facilitate the recovery by SSL of the costs referred to in recital B and for the recovery by the City of the costs incurred or to be incurred by it to construct certain system upgrade works necessary to serve those properties; and

D. The City also wishes to establish a consumption rate for industrial and other non-residential uses.

NOW THEREFORE the Council of the City, in open meeting assembled, enacts as follows:

CITATION

1. This bylaw shall be known and cited as “Multi-Utility Bylaw No. 1291, 2010, Amendment No. 2, Bylaw No. 2127, 2023.”

AMENDMENTS

2. Multi-Utility Bylaw No. 1291, 2010 is amended as follows: (a) In section 4, replace “Schedules B and F” with “Schedules B, F & I”; (b) In section 5 replace “Schedules C, D & E” with “Schedules C, D, E & I”; (c) In section 1 of Schedule D, delete “Regular residential and park water rate – “, replace “$1.4985” with “$2.5466” and replace “2010” with “2023”; (d) In section 2 of Schedule D, add the following as sections 2.1 and 2.2 after the existing table that shows monthly charges for connections of specified sizes:

“2.1 If a connection is made to the portion of the land legally described as PID 031-867-464 Parcel A (Being a Consolidation of Lots A and B see CB402267) Section 26, Goldstream District Plan 3877 lying to the north of Irwin Road, the connection shall be deemed for the purpose of section 2 to be a 150 mm connection regardless of the size of the connection and if a connection is made to the portion of that Parcel A lying to the south of Irwin Road, the connection shall be deemed for the purpose of section 2 to be a 200 mm connection regardless of the size of the connection.

2.2 If the land referred to in section 2.1 is subdivided such that the portions referred to in that section are separate parcels, the 150 mm monthly charge imposed under section 2.1 shall apply to the parcel to the north of Irwin Road and the 200 mm charge imposed under that section shall apply to the parcel to the south of Irwin Road.”

(e) Add the schedule shown on Appendix 1 of this bylaw as Schedule I; and (f) Replace Schedule A with the Schedule A attached as Appendix 2 of this bylaw.

READ A FIRST TIME this ___ day of ___, 2023.
READ A SECOND TIME this ___ day of ___, 2023.
READ A THIRD TIME this ___ day of ___, 2023.
ADOPTED this ___ day of ___, 2023.

Presiding Council Member
Corporate Officer

APPENDIX 1 OF BYLAW NO. 2127, 2023

SCHEDULE “I”

Definitions

1. In this schedule I,

• “Connection” means: (i) the connection of a property, new building, or structure to the Water System, (ii) the replacement of an existing water connection from the Water System to a property, building or structure with a larger connection, or (iii) the execution of a servicing agreement between the owner and the City in connection with the subdivision or development of land under which the owner agrees to do either of the things mentioned in paragraphs (i) or (ii) by a date specified in the agreement; and
• “Extended Service Area Property” means a property shown as such on Schedule A.

Extended Service Area Connection Charge

2. In addition to any other rate or charge applicable under this bylaw, there is imposed in respect of each Extended Service Area Property, as a condition of a Connection that serves that property, a charge (a) in the amount set out in Table A if the Connection occurs in 2023; (b) in the amount set out in Table A plus simple interest at a rate of 5% calculated from the date of adoption of this bylaw to the date of Connection, if the Connection occurs in any year that is after 2023 but before 2038; or (c) in the amount calculated for 2037 under paragraph (b) of this section if the Connection occurs in 2038 or any year thereafter.

Table A — 2023 Connection Charge

---

APPENDIX 2 OF BYLAW NO. 2127, 2023

SCHEDULE A

(End of pages 114–164 conversion)