PEGUIS FIRST NATION INFORMATION DOCUMENT WHAT IS THE PURPOSE OF THIS DESIGNATION? Chief and Council of the Peguis First Nation ( PFN ) propose to designate, by way of a surrender that is not absolute, certain lands located in the City of Winnipeg, commonly known as 1075 Portage Avenue, which land is shown in the sketch attached as Schedule A (the Property ). With limited exceptions under the Indian Act, before reserve land may be leased to non- Indians (i.e. Corporations, Limited Partnerships, etc.,) or an interest in the reserve land is granted to non-indians the reserve land must be designated under the strict provisions of sections 37 to 41 of the Indian Act by the Band for whose use and benefit in common the reserve land was set apart. Broadly speaking, the purpose of the Designation is to allow for the Property, or any part of it, to be leased for commercial, industrial, recreational, institutional, educational, and residential development purposes. The main purposes for designating the Property are as follows: 1. Leasing Canada, on behalf of PFN, would not be able to lease out the Property and receive rent unless the Property noted above is designated. Designation allows valid and enforceable leases to be entered into with existing businesses, tenants and proposed businesses, tenants and developments. 2. Mortgage Financing - most businesses require exclusive use of the property on which they would operate, and for financing reasons, an ability to mortgage the leasehold interest in the property is often needed. In other words, if a business or developer needed financing for a project, a lending institution would be able to place its security interest (i.e. a mortgage for example) on the leasehold interest itself (the lease) and not on the reserve lands. Lending institutions do not typically lend monies unless they get some security for loaned monies. 3. Non-members - many businesses and other developments are owned and/or operated by non-first Nation members and would require authority under the Indian Act to be on Reserve. Additionally, this Designation will allow the Minister of Indian Affairs and Northern Development Canada (the Minister ) to grant such easements, permits (i.e. Hydro and MTS permits etc.), rights-of-way, licences of occupation and other similar rights or interests and amendments of such interests as may be necessary or ancillary to the primary purposes of any lease entered into respecting the Property. Respecting the specific purposes of the Property, or any part of it, the Property may only be used, and the terms of any lease respecting the Property will provide for uses, in accordance with the terms of a servicing agreement to be entered into between the City of Winnipeg and PFN. Contemplated initial uses for the Property include: a professional office building, associated retail and commercial enterprises including, a food cafeteria. The Chief and Council have the authority to negotiate and consent to the terms and conditions of all future leases entered into by Her Majesty the Queen in Right of Canada pursuant to this Designation. 6434186 Manitoba Ltd. ( 643 ), on behalf of the Peguis First Nation Real Estate Development Limited Partnership ( PFNRED LP ) will enter into a head lease with Canada for the Property. Rent under such head lease will be for nominal rent. 643, on behalf of PFNRED LP, may then enter into sub-leases with existing businesses and tenants, and any future businesses, tenants, occupiers and developers by which PFN would receive fair market rent and/or nominal rent. Peguis Chief and Council will
2 have the discretion to receive nominal rent from business entities that are 100% owned or beneficially owned by PFN. During any period that nominal rent is payable under the head lease, the prior written consent of the Minister will be required for all sub-leases. 643, on behalf of PFNRED LP, will also enter into a mortgage by way of a sublease with the Bank of Montreal. The Chief Peguis Investment Trust ( CPIT ) is the sole shareholder of 643 and the limited partner of the PFNRED LP. PFN is the sole beneficiary of the CPIT. The CPIT was established in 2012 as an arms-length trust to hold assets on behalf of and for the benefit of PFN, which assets include, but are not limited, shares of 643 and partnership units of the PFNRED LP. CPIT is overseen by three initial appointed Peguis Band Members who serve as Trustees. After the initial term, the trustees will then be elected. As sole shareholder of 643 and limited partner of the PFNRED LP, CPIT is entitled to receive dividends and net profits from these businesses. The net profits are then re-distributed back into the community for economic development and investment purposes only, in accordance with the CPIT Agreement. A copy of the CPIT Agreement may be viewed or picked up at the Peguis Band Office. NOMINAL RENT LEASING PFN hired the services of McMullan Associates (real estate appraisers) to conduct a land appraisal of the Property in order to estimate the fair market rent that may be generated by the Property. The appraisal prepared by McMullan Associates, dated August 5, 2015, determined that the fair market rental value of the Property is $13.00 per square foot. As the existing two storey office building located on the Property has approximately 69,112 square feet rentable space, the annual fair market rental value of the Property is $898,456.00. However, instead of receiving this annual fair market rental value amount ($898,456.00), the nominal rent value of $1.00 will be paid by 643 to Canada, and will be received by Canada as Indian Moneys under the Indian Act and paid to PFN s Revenue Account. Similarly, all payments made to Canada, by virtue of any easements, permits, rights-ofway, licences of occupation and other similar rights or interests, will be received by Canada as Indian Moneys and credited to PFN s Revenue Account. Indian Moneys from PFN s Revenue Account may be used, in accordance with the Indian Act, for such things as purchasing lands for use by the Band as a reserve, constructing and maintaining roads, bridges, ditches, and constructing houses for members of the Band. All monies derived from any sub-leases with 643 respecting the Property, whether fair market or nominal rent, will be paid to 643 directly. Net revenues of 643 will then be remitted to CPIT and re-distributed back into the community, in accordance with the terms of the CPIT Agreement, for economic development and investment purposes only. WHY DESIGNATE LANDS WHAT ARE THE BENEFITS FOR PFN? Designation and leasing of reserve land facilitates economic development on reserve by authorizing non-band owned commercial businesses and developments to occupy and operate on reserve lands for payment of fair market rent to the band owned entity (643) that has entered into a head lease with Canada. Because legal title to all reserve lands is vested in the Crown, Her Majesty the Queen in Right of Canada must be the lessor in every lease of reserve land, except in the case of a sub lease. A lease made directly between the owner of the land and a lessee is called a head lease. A sub lease is created when a lessee in turn leases all or part of their interest in land to a non-member (non-indian such as a corporation or a limited partnership). A lease contains the terms and conditions which specify all aspects of land use by the lessee. A lease is for exclusive use and the leased land is to be used only for the purposes described in the lease. In return for the rent paid under a lease, the lessee
3 receives the exclusive right to use the land for a specific purpose and period of time subject to specific terms and conditions. In the event that the Designation is ratified by PFN membership and a head lease and sub leases are entered into, the capacity of PFN and its membership to use and occupy the designated lands would be restricted by the terms and conditions of any lease. Chief and Council propose that the head lease with 643 be for 99 years less one day (the leases must be at least one day less than the term of the designation). The individual subleases from 643 to any other entity, may be for less than this term and often are and contain renewal of term clauses. TERM The term of the Designation is ninety-nine (99) years effective upon the date the Property, or such part of it, is set apart as reserve for use and benefit of the PFN. WHEN AND WHERE WILL THE INFORMATION MEETING BE HELD? To assist the PFN membership in understanding the specifics of the designation being proposed, why there is a requirement for a designation vote and the process involved, PFN will hold three (3) information meetings: in the community, in Selkirk, Manitoba and in Winnipeg, Manitoba. Electors of PFN have the right and opportunity to ask questions and get information about the proposed designation so that they can make an informed decision regarding the acceptance or rejection of the proposed designation. Information Meetings will be held as follows: a. on Tuesday, December 15, 2015 at the Selkirk Indian and Metis Friendship Center located at 425 Eveline Street, Selkirk, MB, from 6 p.m. to 8 p.m.; b. on Wednesday, December 16, 2015 at the Peguis Community Hall located on Indian Reserve No. 1B from 6 p.m. to 8 p.m.; and c. on Thursday, December 17, 2015 at the Aboriginal Center of Winnipeg located at 181 Higgins Avenue, Winnipeg, MB from 6 p.m. to 8 p.m. WHO CAN VOTE? An eligible voter for the designation must be a member of PFN (resident either on or off reserve) and be at least 18 years of age as at the date of the designation vote. WHAT CAN BE PLEDGED AS SECURITY THE LANDS OR THE LEASE? Since reserve land is not subject to seizure and cannot be pledged as security for loans or mortgages to financial institutions, it is becoming a common practice for many First Nations who wish to acquire financing for major developments to pledge a leasehold interest as collateral. Thus, a lease on designated land can be mortgaged but not the actual reserve land itself. For clarity, the interest that may be mortgaged is the lease. It is the lease itself that a person puts up as collateral for a loan, and not the lands held by the lease. Even when reserve land is designated for leasing purposes, the First Nation land itself cannot be used as collateral for a loan, and therefore cannot be lost if a loan is defaulted on. CONDITIONS OF DESIGNATION All terms and conditions of any lease(s) must be consented to by the PFN Band Council by way of BCR confirming that reasonable steps have been taken to inform the PFN members of the terms and conditions of the lease(s) to be issued pursuant to this Designation, including without limitation, the amount of fair market annual rent (as determined by an independent appraisal) that the PFN members are foregoing where the lease provides for a nominal rent period and that the PFN members, by a favourable vote of the majority of those present at a general meeting of the members have
4 consented to the terms and conditions of such lease, including without limitation, the rental structure and term of lease. In addition, any amendments of those leases must be consented to by PFN Band Council by way of BCR without the requirement of a further meeting of the PFN members, provided that no amendment shall extend the term of any such right or interest beyond the term of the Designation. Where an amendment to a lease reduces, or has the effect of reducing the rent payable under the lease, substantially changes the term, area or purpose of the lease, the PFN Band Council will confirm by BCR that reasonable steps have been taken to inform the PFN members of the proposed amendments and that the PFN members, by a favourable vote of the majority of those present at a general meeting of the members have consented to the terms and conditions of such amendment. Before any permits, easements, rights-of-way, licenses or other interests and amendments of all such interests are granted pursuant to this Designation, the PFN Band Council will provide its consent by way of BCR. Other than the head lease between 643 and Canada, and any sub-lease(s) between 643 and entities that are 100% owned or beneficially owned by PFN, all leases will be for fair market rent which will be subject to periodic rent reviews as set out in each lease. If 643 (or any successor) under the head lease, or any sub-lessee under a nominal rent sublease, ceases to be 100% owned or beneficially owned by PFN, then the head lease or sub-lease, as the case may be, will immediately become a head lease or sub-lease for fair market rent. ENVIRONMENTAL ASSESSMENTS Any lease and any subsequent sub lease entered into respecting the Property or any part of such Property will be subject to all necessary environmental assessments as required by AANDC policy and applicable legislation. Any required environmental assessments will be reviewed and consented to by Chief and Council by way of BCR passed at a duly convened meeting. The designation appoints the Chief and Council to act as the representatives of PFN in relation to such environmental assessments. WHAT IS A DESIGNATION DOCUMENT? A Designation Document is a legal document signed by the Chief and Council of PFN which is provided to Canada and which designates the lands described in the Designation Document for a particular purpose. This document will only be signed by the Chief and Council upon the designation vote being approved by the eligible electors of PFN. IS IT POSSIBLE TO CHANGE OR REVOKE A DESIGNATION? YES. It is possible to revoke and/or amend a designation as provided for in the Designation Document. The Designation Document to be executed by the Chief and Council of PFN includes a revocation and amendment clauses. On behalf of the Band, Chief and Council may request, by way of Band Council Resolution (without the necessity of a further general meeting of the PFN members), that the Designation be revoked by Ministerial Order, in respect of the whole of or any part of the Property, provided that there are no rights, or interest, legal or equitable, vested or contingent, granted pursuant to the Designation then in existence which would be adversely affected by the revocation. On behalf of the Band, Chief and Council may request, by way of Band Council Resolution, and subject to the approval of the Minister, an amendment to the Designation (for any purpose other than for curing or correcting a clerical omission, mistake or manifest error) provided there are no rights or interests, legal or equitable, vested or contingent, granted pursuant to the Designation then in existence which would be adversely affected by the amendment, and provided that such amendment is first assented to by a simple majority of the electors of the band in accordance with the Indian Act and the Indian Referendum Regulations.
5 Further, notwithstanding the term and purposes of this proposed Designation, the Band authorizes the Band Council, by way of Band Council Resolution made in accordance with subsection 2(3)(b) of the Indian Act, on the Band's behalf and subject to the approval of the Minister, to amend this designation for the purpose of curing or correcting a clerical omission, mistake or manifest error, all of which shall be determined by Canada. FURTHER INFORMATION For further information on the proposed designation contact: Nathan McCorrister, Executive Director Peguis First Nation TLE Implementation Phone: (204) 482-4613 or Toll Free at 1(877)-482-4613 For further information on the referendum process contact: Lynne Turcotte, Section Head Lands & Resources Aboriginal Affairs and Northern Development Canada Room 200, 365 Hargrave Street Winnipeg, MB R3B 3A3 Phone: (204) 983-4260
6 Schedule "A" The Property Lot 3 Plan 26601 WLTO in RL 58 to 60 Parish of St James Excepting thereout all mines and minerals, whether precious or base, solid, liquid, or gaseous. Subject to all existing third party encumbrances on the Lands at the date of this Designation, including, but not limited to, the section 28(2) permits to The Manitoba Hydro-Electric Board and MTS Inc.
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