Report on the Chatsworth Georgian Bluffs

Bio-Digester Joint Management Board meeting held on November 27, 2015

The following is my understanding of key points that arose at this meeting.
Contract for Technical Support (Agenda 6.1)

The Joint Board approved a month-by-month contract with Aquatech at $6,500 per month beginning in
January, 2016.

Although there was no mention of this in Report BIO 15.15 (which provided prices from responders to
an RFP), there is evidently some sort of relationship between Aquatech and GSS Engineering (the
company in which Ross Slaughter is a principal). This came to light after the motion was passed to
accept Aquatech, when Mr. Slaughter spoke from the public gallery to say that the motion should refer
to the bid from Aquatech/GSS Engineering Consultants. Nobody questioned this or commented on it,
so it must have been known in advance but not considered important enough to include in the Report.

Partnership Opportunities (Agenda 6.2)

Apparently, Aquatech would consider operating the Bio-Digester on some sort of contract basis, but has
no interest in putting money into it.

Miller Waste said the Bio-Digester is too small to be of interest, but they apparently have a corporate
policy of supporting local undertakings when feasible. They suggested that all of the grey water from the
Sunset Strip (that constitutes perhaps 90%+ of the present input) should be sent directly to the lagoon.

Miller estimated that a green bin program in Owen Sound would initially yield 10 tonnes per week,
which is about one fifth of the organic material required for the Bio-Digester to operate at 100%
capacity solely on such waste (2,600 tonnes per year). Therefore, green bin waste from 3 or 4 more
municipalities the size of Owen Sound would be needed to operate it on green bin waste only.

CH4 is not interested in any sort of partnership because Harvest Power in London, ON
(http://www.harvestpower.com/home/) has obtained an injection of cash and may come out of
receivership. CH4 is concerned about the uncertainty associated with whether or not Harvest Power will
be in business (major impacts on availability of feedstock and tipping fees because it is such a large
facility). There was no discussion about why Harvest Power was in financial difficulty.

SusGlobal has evidently proposed spending up to $7.5 million, taking over the operation of the BioDigester (some aspects apparently to be operated in association with Aquatech), assuming responsibility
for all costs and then guaranteeing payments to the townships of $200,000 per year (I assume that is for
both townships).

SusGlobal is prepared to make a commitment for 25 years. Operations Director Winters made
reference bonds and securities as part of some sort of 110% guarantee by SusGlobal. I understood that
their financial projections assume a tipping fee for green bin waste of $100 per tonne.

SusGlobal would continue to take sewage and septage from the two townships. They need this because
source-separated organics do not have enough liquid. The end product would be Class A fertilizer
(based on a number of assumptions including environmental approvals that could take a year or more).

In response to a question by Deputy Mayor Mackey, Operations Director Winters said that the only
source material for the Bio-Digester within 50 miles is sewage (presumably he meant septage which, as
we all know by now, is not good feedstock). He said that the GTA has a lot of source material if
somebody wants to truck it that far.

Negotiations with SusGlobal (Agenda 6.2)

Mayor Pringle and CAO Moore advised the Joint Board that Chatsworth resident Bob DeJong had been
appointed by Chatsworth Council to assist in any negotiations. This was met by immediate objections
from Georgian Bluffs Mayor Barfoot who said that only staff are permitted to be involved.

Mayor Barfoot went on to say that he and Deputy Mayor Burley do not provide any detailed information
to the Georgian Bluffs Council on matters discussed in camera with the Bio-Digester Joint Board.

Deputy Mayor Mackey said he doesnt think the Agreement says anything about negotiations with a
third party, but Mayor Barfoot repeated on more than one occasion that the Agreement is very clear.
This should have been followed up with a question about exactly where this is covered in the Agreement
(or even which Agreement was being referred to), but that did not happen.

My reading of both agreements (February 2, 2011 and September 5, 2012) is that neither contains any
provision that would exclude a duly-appointed representative of one party from direct participation in
negotiations with a third party.

CAO Moore said he had no problem with Mr. DeJong being an additional representative of Chatsworth
at the negotiating table with SusGlobal. He went on to say that he thought it would work if Mr. DeJong
met with Chatsworth representatives both before and after any negotiating meeting.

Mayor Barfoot said he has no issue with Chatsworths internal procedures, but continued to insist that
Mr. DeJong not be permitted to participate in any direct discussions with SusGlobal as a staff member
representing Chatsworth. Deputy Mayor Mackey observed: I dont understand why we are having this
conversation.

In the end, Mayor Pringle evidently accepted Mayor Barfoots views as evidenced by the fact that he put
up no objection to it, and in fact moved a motion for staff to negotiate with SusGlobal. Deputy Mayor
Mackey asked for a recorded vote, and then voted NO. He said that he was voted no because he

didnt agree that Mayor Barfoot should decide Chatsworths representatives, not because he disagreed
with the concept of attempting to negotiate with SusGlobal.

After the vote, Deputy Mayor Mackey made the point that, given all of the uncertainties, the Joint Board
should be looking at the other options outlined in the report by Conestoga-Rovers (that has not been
made public), rather than pursuing the SusGlobal option alone. Neither Mayor Pringle nor CAO Moore
picked up on this, so nothing came of it.

2015 Budget (Agenda 9.1)

The draft 2015 budget, unchanged from when it was initially proposed, was back on the table. This is the
budget that the Chatsworth Council rejected some months ago because it includes transportation costs
for grey water from the Sunset Strip ($60,000) as a shared cost. [Note: This is exactly in accordance with
the (ill-advised and deeply flawed) February 2, 2011 Agreement. To me, it makes no sense for the
Chatsworth Council to be reluctant to give direct notice that the Agreement is unsatisfactory, instead
preferring to give indirect notice through refusal to implement one of its provisions.]

At previous Joint Board meetings, Deputy Mayor Mackey has said that the Chatsworth Council objects to
the transportation subsidy and would not approve this budget. He has also pointed out that the draft
budget overstates the revenue from Hydro by about 50% (and thereby understates the loss to be
expected), and noted that the subsidized tipping fee for the Sunset Strip remains the exactly the same as
in the 5-year old Agreement even though such fees elsewhere have increased in the interim.

In previous meetings, Mayor Barfoot has explicitly denied that Chatsworth is subsidizing the Sunset Strip
through reduced tipping fees and shared transportation costs. At this meeting, Mayor Barfoot didnt do
this, but he did point out that Georgian Bluffs absorbs certain costs that really ought to be shared. This
was picked up on by Operations Manager Winters who provided some examples, including fuel for the
tractor, snow removal, some staff time and some use of machinery.

Mayor Pringle noted that Chatsworth had set aside the budgeted amount of $150,000 and that the year
is almost over. He then said: we cant move forward without a budget. CAO Moore noted that the
$150,000 was not set-aside on a line-by-line basis but rather as a lump sum; Georgian Bluffs CAO
Morrison picked up on this immediately, and asked whether the Chatsworth Council would pass the
$150,000 budget if it contained no details.

Deputy Mayor Mackey spoke when Mayor Pringle and CAO Moore did not answer. He said No. [Note: I
actually asked CAO Morrison to use the microphone because I didnt believe what I was hearing. It is
surprising that slight-of-hand such as this might be considered to be acceptable at Georgian Bluffs.]

The budget was deferred to the next meeting (scheduled for December 18, 2015 at 8:00 am).
Prepared by Trevor Falk
December 1, 2015