AGREEMENTS WITH THE CITY OF LÉVIS

Decree – Bill 204 – An Act respecting Ville de Lévis (December 2007)

Agreement with the City of Lévis (October 2006 - In French only)

Agreement with the City of Lévis (July 2006 - In French only)

Rabaska and the City of Lévis have signed ironclad agreements for at least 40 years that set out Rabaska's economic commitments, the fiscal framework of its financial obligations, and its participation in various regards, notably the environment (reforestation and farming practices), compensation measures for local residents, site closure and cleanup, the emergency response plan, and recreational activities in the project area. If Rabaska goes ahead, the company will pay the City of Lévis nearly half a billion dollars and cover all additional expenses related to the project.

Rabaska worked closely with the city to come up with an agreement that would best meet civic expectations and the wishes of residents. In doing so, it has demonstrated beyond any doubt that it will honor its social and economic agreements. By respecting residents and the environment, Rabaska wishes to take its place as a full-fledged member of the Lévis community.

The agreement makes Rabaska one of the top municipal tax contributors in Quebec among industrial facilities. And while its contribution will represent nearly 5% of City of Lévis revenues, Rabaska will not generate any expenses for the municipality.

The economic impact agreement with the City of Lévis must be subject to a private act.  Bill 204 was introduced to this effect on May 10, 2007.

HIGHLIGHTS: TAXES AND INFRASTRUCTURES

Before construction
Since the City will incur various expenses in studying the Rabaska project and later during construction, notably in preparing for public environmental hearings and working with Commission de protection du territoire agricole du Québec (CPTAQ), Rabaska will pay the City $150,000 as soon as the agreement is ratified, to cover all expenses to date. It will then pay $37,500 per quarter, beginning July 1, 2006.

During construction
From the construction start to the beginning of operations, Rabaska will pay $400,000 per calendar year.

Rabaska will also cover all costs incurred by the City to construct an access road to the LNG terminal and other properties beyond Route Lallemand, and to extend the water system along Highway 132 to the eastern edge of the terminal site. This water system will not only serve the terminal, but also properties along Highway 132. The cost of this work is estimated at approximately $5,850,000.

During operations
Once the facility begins operating, Rabaska will pay $7 million a year for the first five years, $7.5 million for years 6 to 10, $8.5 million for years 11 to 15, $10 million for years 16 to 20, and $11 million for years 21 to 50, for a total of nearly $500 million if the terminal remains in operation for 50 years. This is an average of $10 million a year. Rabaska will also pay to acquire the goods and services specifically needed for the project or required by government authorities.

HIGHLIGHTS: LOCAL SPINOFFS

As announced, Rabaska plans to hire local workers and Lévis companies whenever possible, and to use Lévis educational institutions for training purposes as needed.

During construction, Rabaska's main contractors will be required to break the work down into small and medium-sized bid items whenever possible, invite Lévis businesses to take part in the tendering process, and for the same quality, delivery times, and price, choose the supplier with the greatest amount of Lévis content.

Once the terminal begins operations, Rabaska will adopt a formal policy giving precedence to Lévis suppliers. The bulk of Rabaska employees will live on the south shore to ensure appropriate levels of surveillance.

ENERGY EFFICIENCY

Rabaska has undertaken to provide connection points so that frigories can be transferred for the purpose of converting thermal waste. Rabaska will make available general scientific information it possesses that could prove useful to economic development organizations and the City in identifying potential users, or to local organizations carrying out scientific research, such as UQAR in Lévis, for example.

Rabaska will also contribute to a research chair in energy efficiency in Lévis and facilitate contact between organizations involved in developing the refrigeration industry in Lévis and other such organizations around the world, notably the International Institute of Refrigeration.

ENVIRONMENTAL IMPACT MITIGATION MEASURES

Reforestation
The construction of the Rabaska terminal will result in the loss of 45 hectares of vegetation, including 18 hectares of wooded area. Rabaska will compensate this loss of wooded area through reforestation with 10 hectares of large seedlings (mainly on the concealment berms) and 18 hectares of small native plant species. The 18 hectares of lost woodland will therefore be replaced with 28 hectares of wooded area.

Farming Practices
To minimize the impact of the project on agriculture and allow farm owners and tenants to continue their activities on lands that Rabaska will acquire but not use, Rabaska will formally offer to lease these lands to farmers, giving priority to current owners and tenants. Rabaska will take the appropriate measures to limit disruptions to farming practices due to facility proximity. This commitment will be duly included in the leases.

Public Transit
Rabaska will help promote public transit in Lévis as well as services offered by Société de transport de Lévis (STL) as part of overall efforts to reduce greenhouse gas emissions. Rabaska will provide $300,000 to the City, including $100,000 at the start of project construction work or December 31, 2007, whichever comes first.

COMPENSATION MEASURES FOR NEIGHBORING PROPERTIES

More than two years ago, Rabaska announced various measures for property owners living within a 1.5 km radius of the future facility. Details of this compensation policy will be released within 30 days of the signing of the agreement, although the overall thrust of the policy has been public knowledge for some time.

PROJECT EXPANSION

Under this agreement, Rabaska reiterates that it currently has no plans to expand the terminal, either for increased storage or vaporization capacity.

In the event such a project is undertaken, Rabaska will refrain from locating any storage or vaporization equipment outside the project's proposed land facility perimeter. Any additional equipment could therefore only be located between the Hydro-Québec power lines and Highway 20. Rabaska will not proceed with such an expansion without first obtaining the authorizations required from the governments of Quebec and Canada and approval from the City.

EMERGENCY RESPONSE PLAN

As per the agreement, an interim emergency response plan more detailed than the one included in the impact study was submitted to the City of Lévis within six months of the signing of the agreement. In cooperation with the City's fire department, Rabaska is also scheduled to draw up a final emergency response plan that includes a minute-by-minute intervention scenario. The plan will be submitted to the City for approval, will be completed at least six months before the terminal begins operating, and may only be finalized once the final project engineering has been completed.  The final plan will be drawn up in conjunction with the Joint Municipality/Industry Committee (CMMI).

RECREATIONAL ACTIVITIES

The "Blue Route"

Rabaska will ensure that, with the approval of the City, Transport Canada, and kayak club Le Squall, an area is set aside for the passage of small, non-motorized watercraft under the trestle bridge connecting the wharf to the river facilities, such that the impact on implementation of the "Blue Route" project currently being developed by the City in collaboration with Fédération québécoise du canot et du kayak is minimized.

The "Green Route"

Use of Highway 132 for the construction and operation of the site will be minimal. A new access road from Route Lallemand will be built when construction of the terminal begins, and should be completed within three months. During this period, a temporary entrance will be set up on Highway 132. Rabaska will ensure that inconvenience to "Green Route" users is kept to a minimum.

Cross Country Skiing

Rabaska will allow skiers to continue to use the cross country trails, as satisfactorily relocated as regards current trails, skiing requirements, and terminal operating constraints.

LIAISON COMMITTEE

Within 60 days of adoption of a decree giving the green light to Rabaska, Rabaska and the City will make all necessary arrangements to ensure a liaison committee is set up that includes representatives of Rabaska, the City, and residents in the Ville-Guay and La Martinière sectors. The committee's goal will be to facilitate communication and promote harmonious relations between the parties.

LA MARTINIÈRE REGIONAL PARK

The City will set up a management committee for the future La Martinière park, which Rabaska will actively help create by seconding one of its representatives to the project and providing financial support. Rabaska's financial contribution will serve exclusively to finance development work directly related to La Martinière park and the completion of studies aimed at park presentation and interpretation. Rabaska will thus provide nearly $500,000 for the park.

SIGNIFICANT ECONOMIC SPINOFFS

The Rabaska terminal represents a total estimated investment of $840 million. This includes $775 million for construction and $65 million for the gasline connecting the terminal to the existing TQM Pipeline transmission line in Saint-Nicolas. Medium and long term spinoffs from the project will be significant, not only for Lévis and the Chaudière-Appalaches and greater Quebec City areas, but for the province of Quebec as a whole.

The direct and indirect economic spinoffs for Quebec-known as the "added value" have been estimated with the assistance of Institut de la statistique du Québec (ISQ). It is calculated that 70% of the benefits from the investment will remain in Canada, including $444 million - over half the total value of the project - in Quebec alone. Of this amount, $234 million will be paid in salaries.

Once in operation, the terminal, which is designed to run on a continuous basis 24 hours a day, 365 days a year, will have an annual operating budget of $46.5 million, in addition to some $10 million for maritime fees including port, piloting, tug, and boatage fees.

Substantial government revenues

Construction work will generate significant government revenues in the form of income tax on salaries, taxes on products and services, or indirect taxes on fuel. Based on ISQ estimates, government revenues, including incidental taxation (revenues from RRQ, FSS, CSST, and employment insurance contributions) will amount to over $100 million, with $71 million for the Government of Quebec and $31 million for the Government of Canada.

Operation of the facility will also bring in some $12.1 million in annual taxes and incidental tax revenues for the provincial and federal governments, $8.9 million for Quebec and $3.2 million for Ottawa. The municipality of Lévis and local school board will also receive sizeable property tax revenues from terminal operations. Since property taxes have yet to be determined, Rabaska has agreed to pay a minimum of $7 million in municipal taxes and $1 million in school taxes per year.

FORMAL COMMITMENTS

The Rabaska partners have formally committed to ensuring that the Rabaska project is never a financial burden to municipalities or taxpayers.

More specifically, the partners have made the following undertakings: 

For residents living within 1.5 kilometer of the facilities

• ?Compensate any homeowners who do not wish to live close to the facility by covering all expenses for selling their current properties, buying new ones, and moving
• ?Financially compensate homeowners based on the fair market value of their homes if their resale value is directly affected by the project-a situation we believe to be unlikely
• ?Negotiate an agreement guaranteeing the current market value of homes with any homeowners who wish to remain but fear that their homes will drop in value over the long term because of the project
• ?Fully compensate homeowners for any hike in insurance premiums due to Rabaska's presence in the region-a possibility we consider unlikely

For municipalities

• Cover the cost of any new service or need generated by the project, as well as additional future expenses related to increased public safety and fire protection measures, training for officials, changes to aqueduct and sewer systems, etc.
• Significantly boost municipal tax revenues by guaranteeing a minimum annual payment of $7 million in property taxes and $1 million in school taxes

For communities

• Generate maximum economic spinoffs for the region through priority hiring of local workers during construction and operation of the terminal

HIGH DEMAND FOR WORKERS

As part of its commitment to the community, Rabaska will, whenever possible, source the goods and services it requires from local businesses and merchants and hire local workers during both the construction phase, which will last three years, and the operations phase.

Construction Phase

Construction of the terminal will take just over three years and generate some 4,995 person years of employment, with 2,440 direct jobs, and 2,555 indirect jobs at various suppliers'.

In terms of actual job numbers, construction alone will require the equivalent of 1,580 person years. An average of 474 people will be employed at the site during construction, and up to 800 people during peak periods.

Nearly all construction trades will be required for the project. In addition to general laborers, the tradespeople in greatest demand will be pipefitters, welders, carpenters, structural steel workers and cement workers.

Rabaska has agreed to give priority to local workers. Given the pool of construction workers in the Quebec City area, local hires are expected to account for around 73% of the workers at the project site, with an annual payroll that may exceed $60 million.

The some 4,995 direct and indirect jobs will be created in the following sectors of activity:

More specifically, Rabaska will need...

Professionals

• Civil, mechanical, and industrial engineers
• Architects
• Land surveyors
• Architectural technicians
• Civil engineering technicians
• Building mechanical technicians
• Building appraisal and evaluation technicians
• Geomatics technicians: Geodesy
• Industrial engineering technicians
• Mechanical engineering technicians
• Industrial electronics technicians
• IT systems technicians
• Electronic design technicians
• Environment, hygiene, and workplace safety technicians
• Metallurgical engineering technicians: Materials testing
• Accounting and management technicians
• Office technicians: Work coordination
• IT technicians: Industrial data processing
• Graphics technicians
• Industrial design technicians

Trades with trade card

• Insulators
• Carpenter-joiners
• Cement finishers
• Roofers
• Electricians
• Tinsmiths
• Reinforcing steel erectors
• Refrigeration specialists
• Crane operators
• Security system installers
• Instrument technicians
• Millwrights
• Heavy machinery mechanics
• Structural steel erectors
• Scaffolding installers
• Heavy equipment operators
• Mechanical shovel operators
• Painters
• Plasterers
• Resilient flooring layers
• Locksmiths
• Pipefitters
• Interior systems installers
• Clerks
• Truck drivers
• Security guards
• Storemen
• General laborers
• Lifting device operators
• Generator operators
• Pump and compressor operators
• Welders
• Specialized laborers

Locally sourced equipment

• Cement mixers
• Crushers
• Concrete plant
• Generating sets
• Construction trailers
• Air Track vertical drills
• Generators
• Air hammers
• Benders
• Wood barricades
• Beacons
• Pumps
• Project lighting units
• Backhoes
• Air compressors
• Sideboom tractors
• Hydraulic cranes
• Power rams
• Roller and compactors
• Rollers
• Vibrating plates
• Rotary drills
• Pickup trucks
• Welder's truck
• Pickup with powder blender
• Dump truck
• Pickup with hoist
• Tractor truck with trailer for machinery
• Tractor truck with trailer for pipework
• Hydraulic shovels
• Tractor loaders
• Wheel loaders
• Tramac hydraulic hammer
• Office equipment and supplies
• IT/telephone equipment and support
• And more

Services

Work will be performed by the following contractors and subcontractors under the following R.B.Q. licenses:

• Industrial buildings
• Heavy industry factory complexes
• Roads
• Underground civil engineering works
• Underwater civil engineering works
• Electrical distribution substations
• Underground lines
• Pipelines
• Piles and special foundations
• Architectural structures and structural works
• Masonry
• Cement finishing
• Interior systems
• Concrete reinforcement
• Carpentry
• Woodwork
• Formwork
• Course and foundation wall formwork
• Resilient coverings
• Flooring
• Building hardware
• Metal siding
• Tinsmithing
• Roofing
• Welding
• Ventilation
• Thermal insulation
• Insulation
• Soundproofing
• Refrigeration
• Building painting
• Civil engineering works painting
• Intercom systems
• Telephone systems
• Surveillance systems
• Instrumentation and control systems
• Fire alarm systems
• Fire protection systems
• Worksite mechanics
• Excavation and earthwork
• Paving and asphalting
• Electrical works
• Plumbing
• Weatherization
• Alignment and grading
• Signal systems
• Flameproofing
• Industrial piping
• Cutting and drilling
• Pneumatic control systems
• Guardrails and fence rails
• Erection of scaffolding for construction work
• Cleaning of worksites

Various

• Nondestructive tests
• Soil tests
• Compaction tests
• Concrete tests
• Waste evacuation and processing
• Accommodations
• Food/canteen services
• Road maintenance and snow removal
• Vehicle rental
• Fuel

Examples of materials and services that can be subcontracted locally:

• Sand
• Cement
• Concrete
• Steel structures
• Siding
• Asphalt
• Gravel
• Paving
• Structural components
• Lumber
• Piping
• Plumbing fixtures
• Electrical fixtures
• Air conditioning
• Paint
• Frames
• Plaster
• Heating
• Furniture
• IT supplies
• Tools
• Topsoil
• Peat
• Seedlings

Operations Phase

Once the terminal is up and running, it will require 70 workers, including specialized laborers and administrative staff. These positions will be filled by residents of Lévis and the surrounding area, as well as new residents who move to the area. Terminal-related operations will generate some 220 positions at suppliers'-primarily businesses and organizations in the region. It is estimated that close to two - thirds of these indirect jobs-or 140 positions - will be filled by workers from the region.

Rabaska will therefore need...

• Mechanical and electrical engineers
• Industrial engineering technicians
• Mechanical engineering technicians
• Electrical engineering technicians
• Instrumentation and process control system technicians
• Industrial maintenance technicians
• Laboratory technicians
• Logistics technicians
• IT systems technicians
• Environment, hygiene, and workplace safety technicians
• Accounting and management technicians
• Office technicians
• Administrative assistants
• Electricians
• Mechanics
• Security guards
• Specialized laborers

Services

Service contracts will be drafted to cover various aspects of operation and maintenance, including...

• Mechanical maintenance: Piping
• Mechanical maintenance: Compressors and motors
• Maintenance and verification of concrete works
• Maintenance and verification of jetty structures and docking equipment
• Industrial electrical maintenance
• Office supplies and equipment
• Road maintenance/snow removal
• Greenspace and woodlot maintenance
• Facility maintenance
• Building maintenance: Facades, plumbing and sanitation, electrical works, air conditioning, heating
• IT/telephone equipment and support
• Materials transport
• Platform lifts for inspections
• Vehicle fuel
• Drink and other distributors
• Delivery services
• Vehicle rentals
• Waste disposal and treatment