December 30, 2010

Mr. Sachs & Ms. Jarvis,

Since it is now evident that Ottawa City Council is currently unwilling to add any value in protecting the South March Highlands, we are extending this offer to work directly with you in this regard. The South March Highlands – Carp River Conservation Inc. is the legal entity that represents the interests of over 6,000 individuals who are committed to being stewards of Ottawa’s Great Forest – the South March Highlands.

We suspect that you may not have been fully aware of the environmental significance of this area when you originally purchased the lands north of Kizell Wetland and Beaver Pond from Genstar in Sept 2000. We are confident that by working together, we can create a win-win solution to this situation.

By now you are no doubt aware that the South March Highlands is an old-growth forest, home to 20 documented Species-at-Risk, has the highest floristic diversity and densest bio-diversity in Ottawa, and contains several archaeological sites that are twice the age of the Egyptian pyramids. You are also aware that there is substantial community resistance to your development plans and that Algonquin spiritual leaders consider this area to be ancient, unique, and a very special sacred space.

According to the Nature Conservancy of Canada, unlike the tax provisions for donating land directly to a municipality, an individual or corporation that donates land to a charitable land trust may obtain a tax credit equal to 100% of the market value of that land.

We are willing to establish a charity for that purpose if you are willing to donate all remaining undeveloped land that you own in the South March Highlands. At the point when you are ready to wind up the corporate operation of KNL, any remaining tax credit may be fully monetized by selling the corporation to a third party, such as an income trust looking to shelter earnings as they roll-over into a corporate entity.

Furthermore, we propose to name the resulting park, the “Urbandale Conservation Forest” (or a similar name of your choosing) so that you may leverage significant, positive, and very green, branding benefits in recognition of your generosity. Our marketing experts will work with you on signage and branding opportunities accordingly. We will also support you in a media campaign to ensure that branding benefits are maximized. When leveraged into our existing Stewardship Plan for the area, which emphasizes eco-tourism involving an audience measured in millions of people, we believe that this will be of significant branding value to you.

Should you wish to monetize some of your current investment now, we are also prepared to optionally enter into a long-term purchase agreement for “Phase 9.” This would enable you to obtain a tax credit for donating land west of Goulborne Forced Road (GFR) as described above, as well as receive annual payments for the land east of GFR and north of Beaver Pond.

In this scenario, we would establish the charity so that it can receive community donations, and pursuant to the 40% Agreement which runs on title with the land, purchase the 60% of developable land at fair market value and the 40% at no cost (as you did when you purchased the lands). You would facilitate this purchase via a vendor-take-back mortgage at 6% over 30 years.

Since some lead time would be necessary to establish the cash flow for the charity, depending on the agreed purchase price, the first couple of annual payments may need to be balloon payments. Nonetheless, since city records show the assessed value of the land for tax purposes is only $6 million, it is evident that KNL paid less than that for that land and you would receive more than double your investment plus the 6% payout.

If you wish to explore this option, we can provide further details of how we will raise the funds for purchase and we can discuss the methodology for fair market valuation.

We believe that the above represents a fair outcome for you in what otherwise is an increasingly difficult situation. We hope that in considering this offer, you reflect on the merits of taking a long-term view of the benefits from enhancing your eco-stature and brand over a status quo course of action that appears likely to significantly damage it. We believe that you will conclude that it is better business to work with a community than to continue to fight against it and we trust that, together, we can both start the new year on a positive note.

Sincerely,

Paul Renaud
South March Highlands – Carp River Conservation Inc.