HomeMy WebLinkAboutLEG 08-19Cfy �t
DICKERING
Report to
Executive Committee
Report Number: LEG 08-19
Date: December 2, 2019
From: Paul Bigioni
Director, Corporate Services & City Solicitor
Subject: Municipality Contribution Agreement
- Ontario Lottery and Gaming Corporation and
The Corporation of the City of Pickering
- File: L-4100
Recommendation:
1. That the attached Municipality Contribution Agreement between Ontario Lottery and Gaming
Corporation and The Corporation of the City of Pickering be approved;
2. That the Mayor and City Clerk be authorized to execute the said Municipality Contribution
Agreement; and
3. That the appropriate City of Pickering officials be authorized to take the necessary actions as
indicated in this Report.
Executive Summary: The Municipality Contribution Agreement (the "Agreement") between
Ontario Lottery and Gaming Corporation ("OLG") and the City will set out the timing and
calculation of payments to be made to the City out of gaming revenues of the Pickering Casino
Resort. The form of the Agreement, the manner in which payments are calculated and the timing
of those payments are all mandated by OLG. City staff recommend that the Agreement be
executed to enable payments to be made to the City once the Pickering Casino Resort opens to
the public.
Financial Implications: The Agreement is required for the City to receive quarterly payments
from OLG on account of hosting the Pickering Casino Resort. The amount of OLG's payments
cannot be confirmed precisely, as it will be calculated based upon actual gaming revenues, as
more particularly set out below and in the attached draft Agreement.
Discussion: The draft Agreement is Attachment No. 1 to this Report. The Agreement
will govern the timing and calculation of payments to be made to the City out of gaming revenues
from the Pickering Casino Resort. The Agreement will remain in effect for as long as casino
games are conducted and managed by OLG at the Pickering Casino Resort site at 1802 and 1902
Bayly Street and 2028 Kellino Road (North-west corner of Bayly Street and Church Street).
Pursuant to the Agreement the City shall be entitled to receive payment from OLG calculated as
follows:
LEG 08-19 December 2, 2019
Subject: Municipality Contribution Agreement Page 2
The Sum is the aggregate (without duplication) of:
A. (1) 5.25% of the first $65 million of Electronic Games Revenue generated in such
Operating Year; plus
(ii) if the Electronic Gaming Revenue is greater than $65 million, 3.00%of the next $135
million of Electronic Games Revenue, if any, generated in such Operating Year; plus
(iii) if the Electronic Gaming Revenue is greater than $200 million, 2.50% of the next
$300 million of Electronic Games Revenue, generated in such Operating Year; plus
(iv) if the Electronic Gaming Revenue is greater than $500 million, 0.50% of any
additional Electronic Games Revenue generated in such Operating Year; and
B. is 4.00% of Live Table Games Revenue, if any, generated during such Operating Year.
Payments shall be made to the City quarterly throughout the term of the Agreement.
The Agreement also requires OLG and the City to collaborate on the design and joint
implementation of a Community Recognition Program for the promotion of the positive impact of
the payments to the City.
The Agreement has been prepared by OLG, and contains OLG's mandatory provisions regarding
the calculation and timing of payments to a gaming host municipality. City staff recommend that
Council approve the Agreement, and that it be executed on behalf of the City by the Mayor and
City Clerk.
Attachments:
1. Municipality Contribution Agreement between Ontario Lottery and Gaming Corporation and
The Corporation of the City of Pickering.
Prepare - dorsed By:
Paul Bigion
Director, Cor
PB:ks
ate Services & City Solicitor
LEO 08-19 December 2, 2019
Subject: Municipality Contribution Agreement Page 3
Recommended for the consideration
of Pickering City Council
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cek di a tr. Zoi zo
Tony Prevedel, P.Eng.
Chief Administrative Officer
Attachment #1 to Report LEG 08-19
MUNICIPALITY CONTRIBUTION AGREEMENT
THIS AGREEMENT is made as of
day/month/year
BETWEEN:
ONTARIO LOTTERY AND GAMING CORPORATION, a
statutory corporation established under the Ontario Lottery and
Gaming Corporation Act, 1999 (Ontario) with its head office located
at 70 Foster Drive, Suite 800, Sault Ste. Marie, ON P6A 6V2 and its
corporate office located at 4120 Yonge Street, Suite 420, Toronto,
ON M2P 2B8, facsimile number 416-224-7003
(hereinafter referred to as "OLG")
OF THE FIRST PART
- and —
THE CORPORATION OF THE CITY OF PICKERING, with its administrative
office located at 1 The Esplanade, Pickering, ON L1V 6K7
(hereinafter referred to as the "Municipality")
OF THE SECOND PART
WHEREAS OLG has the authority to conduct and manage lottery schemes within the
meaning of subsection 207(4) of the Criminal Code (Canada) and subject to the Gaming Control
Act, 1992 (Ontario), including Electronic Games and Live Table Games;
AND WHEREAS OLG intends to conduct and manage a gaming site at 2028 Kellino Street,
Pickering, ON L1W 3R6 (the "Location");
AND whereby the parties acknowledge it would be in the public interest for the host
Municipality of the Location to have access to funds which may be used, at the discretion of the
Mayor and Council, for municipal purposes;
NOW THEREFORE in consideration of the respective covenants and agreements, representations,
warranties and indemnities herein contained and other good and valuable consideration (the receipt
and sufficiency of which are acknowledged by each party hereto) the parties agree as follows:
1. Definitions
As used herein, including the foregoing recitals, the following terms shall have the respective
meanings indicated below:
(a) "Agreement" has the meaning set forth in the recitals to this Agreement;
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(b) "Annual Contribution" has the meaning set forth in Section 3(a);
(c) "Annual Contribution Quarterly Payment" has the meaning set forth in
Section 4(a);
(d) "Casino Games" means Electronic Games, Live Table Games and such other casino
games and promotional schemes that are, in each case, conducted and managed by
OLG from time to time during the Term at the Location;
(e) "CRP" has the meaning set forth in Section 5;
(f) "Effective Date" means day/month/year or such later date as OLG may specify;
(g) "Effective Date of Termination" has the meaning set forth in Section 2;
(h) "Electronic Games" means all electronic gaming devices, including but not limited
to reel -type and video -type slot machines, electronic table games and dealer assisted
electronic games, in each case, whether or not a live dealer is present to enable or
control game play;
(i)
"Electronic Games Revenue" means, for any period, the sum of net revenue
generated from Electronic Games at the Location, calculated in accordance with
International Financial Reporting Standards or such other Canadian generally
accepted accounting principles as OLG adopts from time to time in its sole
discretion. For greater certainty, the Electronic Games Revenue will only include net
revenue generated from the Electronic Games at the Location and will not include
any revenue whatsoever from other products or services provided by OLG at the
Location in the Municipality;
(j) "Live Table Games" means games operated by a live dealer at a single gaming
table, but excluding Electronic Games;
(k) "Live Table Games Revenue" means, for any period, the sum of net revenue
generated from Live Table Games at the Location, if any, calculated in accordance
with International Financial Reporting Standards or such other Canadian generally
accepted accounting principles as OLG adopts from time to time in its sole
discretion. For greater certainty, the Live Table Games Revenue will only include net
revenue generated from the Live Table Games at the Location and will not include
any revenue whatsoever from other products or services provided by OLG at the
Location in the Municipality;
(1) "Location" has the meaning set forth in the recitals to this Agreement;
(m) "Operating Year" means each period from April 1 st to March 31st inclusive, during
the Term, to the end of the Term, except that the first Operating Year shall be the
period beginning on the Effective Date and ending on the following March 31st and if
this Agreement shall be terminated effective on a date other than March 31st in any
year, then the period from April 1st of the calendar year in which such termination
occurs (or April 1st of the immediately preceding calendar year if the date of
termination occurs in January, February or March) to such effective date of
termination shall be treated as an Operating Year;
(n) "Overpayment" has the meaning set forth in Section 4(c);
(o) "Term" means the period of time referred to and described in Section 2 hereof.
2. Term and Termination
The term of this Agreement (the "Term") will become effective on the Effective Date and will
terminate at the earliest of:
(a) the date on which all Casino Games are no longer conducted and managed by OLG
in the Municipality atthe Location;
(b) the date on which any license, permit, approval, consent and/or other permission that
may be required for the continued use and operation of the Casino Games at the
Location in the Municipality is no longer available, becomes invalid or ceases to
have effect;
(c) the effective date of written notice of termination provided by OLG to the
Municipality, in the event that Casino Games continue to be conducted and managed
by OLG in the Municipality at the Location, which effective date must be specified
by OLG in such notice; provided, however, that such effective date shall be at least
30 days following the date of such notice. OLG will endeavour to provide more than
30 days' notice, and, where not practicable to do so and OLG has commenced
conducting and managing Casino Games at the Location, OLG shall:
(i)
explain, in said notice, why it is not practicable to do so, subject to any
confidentiality concerns, as well as setting out in such notice the length of the
time period equal to the difference between: (A) 365 days; and (B) the
number of days' notice actually given by OLG. For greater certainty, such
time period shall not exceed 335 days; and
(ii) pay to the Municipality, in accordance with the timelines in Section 4,
amounts which aggregate OLG's estimation of the Annual Contribution
Quarterly Payment(s) that OLG would have paid in respect of the time period
referred to in subsection 2(c)(i) above had this Agreement not been
terminated in accordance with this Section 2(c); and
(d) the date mutually agreed to in writing between OLG and the Municipality
(the "Effective Date of Termination").
For greater certainty, OLG or the Municipality shall be able to provide written notice to the
other party of the circumstances in (a) and (b) above without triggering the compensation
mechanisms set out in subsection (c) above.
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3. Payments
(a) Where OLG has commenced conducting and managing Casino Games at the
Location, then, during the Term and subject to the terms and conditions of this
Agreement, the Municipality shall be entitled to receive from OLG in respect of each
Operating Year the amount (the "Annual Contribution") equal to the sum of A + B,
where:
A is the aggregate (without duplication) of:
(i)
5.25% of the first $65 million of Electronic Games Revenue
generated in such Operating Year; plus
(ii) if the Electronic Gaming Revenue is greater than $65 million, 3.00%
of the next $135 million of Electronic Games Revenue, if any,
generated in such Operating Year; plus
(iii) if the Electronic Gaming Revenue is greater than $200 million,
2.50% of the next $300 million of Electronic Games Revenue,
generated in such Operating Year; plus
(iv) if the Electronic Gaming Revenue is greater than $500 million,
0.50% of any additional Electronic Games Revenue generated in
such Operating Year; and
B is 4.00% of Live Table Games Revenue, if any, generated during such
Operating Year.
(b) Following the Effective Date, in the event any additional taxes, charges, conditions
or requirements are imposed by the Municipality on OLG in respect of the continued
operation of the Casino Games at the Location in the Municipality, the Municipality
acknowledges and agrees that OLG shall be entitled to amend the calculation of the
Annual Contribution in a way that may reduce the Municipality's entitlement. For
greater certainty, the Annual Contribution for the first Operating Year shall be
calculated based on Electronic Games Revenue and Live Table Games Revenue
generated as of the Effective Date.
4. Timing and Calculation of Payments
(a) Subject to Section 4(b), within twenty-one (21) days of the end of each Operating
Year quarter during the Term, OLG shall pay to the Municipality the portion of the
Annual Contribution (the "Annual Contribution Quarterly Payment") to which
the Municipality is entitled for such Operating Year quarter. In calculating the
portion of each Annual Contribution Quarterly Payment derived from Electronic
Games, OLG will notionally aggregate all Electronic Games Revenue generated
during such Operating Year in order to apply the correct percentage set out in Section
3(a). OLG will provide access to its most current audited consolidated financial
statements once such are made public by the Ministry of Finance in public accounts.
5
For example and by way of illustration only, Exhibit A to this Agreement sets out a
sample calculation of the Annual Contribution.
(b) In respect of the Operating Year quarter in which this Agreement is terminated, OLG
shall pay to the Municipality the Annual Contribution Quarterly Payment to which it
is entitled: (i) in the ordinary course, in the event the Effective Date of Termination
of this Agreement occurs after the date that is twenty-one (21) days following the end
of an Operating Year quarter; or (ii) within fifteen (15) days of the Effective Date of
Termination, in the event Effective Date of Termination is on or before the date that
is twenty-one (21) days following the end of an Operating Year quarter.
(c) At any time and from time to time during an Operating Year and up to the date that is
60 days after the last day of such Operating Year, in the event OLG determines that
there has been an overpayment ("Overpayment") by OLG to the Municipality of
any Annual Contribution Quarterly Payment in such Operating Year, the
Municipality acknowledges and agrees that OLG may deduct and set off the full
amount of such Overpayment from future Annual Contribution Quarterly Payment(s)
or, if there are insufficient future Annual Contribution Quarterly Payments to fully
set off such Overpayment, the Municipality will promptly reimburse OLG for the full
amount -of such Overpayment (or the remaining amount thereof not already deducted
as set-off). OLG will use its commercially reasonable efforts to effect any deduction
and set-off pursuant to this Section 4 in a manner that recognizes the Municipality's
desire to realize reasonable continuity in cash flow associated with the Annual
Contribution.
5. Community Recognition Program
(a) During the Term, the parties will collaborate in good faith to design and jointly
implement the CRP for the promotion of the positive impact of the Annual
Contribution on the Municipality and to promote and communicate to the public
decisions made and initiatives taken by the Municipality regarding the deployment or
other allocation of the Annual Contribution for municipal purposes.
(b) It is expected that the CRP will include, at a minimum, one community event during
each Operating Year during the Term, discussions and meetings on a regular basis
between the appropriate representatives of each party relating to spending, allocation
and deployment of the Annual Contribution, the allocation of responsibilities and
obligations in respect of the development, operation and/or other activities and
initiatives of the CRP, including but not limited to any program management
functions to be performed by each party.
(c) The Municipality will cooperate reasonably with OLG to facilitate messaging and
communication of the CRP and its mandate. The Municipality will comply with all
reasonable initiatives and requests proposed by OLG to the Municipality from time
to time relating to the CRP and its initiatives, including but not limited to branding,
marketing and public acknowledgements in respect of funding by OLG.
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(d) The Municipality will ensure that its marketing and advertising materials are not
false, misleading or deceptive, do not portray OLG or customers of the Location or
the general public in a disparaging manner, and that such marketing and advertising
materials are in compliance with the marketing and branding guidelines which OLG
communicates to the Municipality from time to time. In the event the Municipality
does not comply with OLG's marketing and branding guidelines, OLG may
thereafter require the Municipality to submit all proposed advertising and marketing
materials in relation to the matters set out herein to OLG for its review and approval
not less than 15 business days prior to the expected use or distribution of such
materials.
6. Amendment and Restatement; Entire Agreement
This Agreement constitutes the entire agreement between the Municipality and OLG with respect to
the matters herein and, without limiting the foregoing, amends and supersedes all prior agreements
and understandings, oral or written, between the parties hereto or their respective representatives
with respect thereto.
7. Further Assurances
The parties agree to do, or cause to be done, all acts or things and execute all such further documents
as may be necessary to implement and carry into effect this Agreement to its full extent.
8. Normal Costs of Development
The parties acknowledge and agree that nothing herein shall operate to fetter any legislative or quasi-
judicial jurisdiction of the Municipality, and in particular, it is understood and agreed by the parties
that this Agreement does not preclude the Municipality from imposing upon occupants, owners or
developers of the property at which the Casino Games are located, normal development related costs
(including but not limited to the costs of infrastructure improvements under local or regional
jurisdiction) arising from the Casino Games in the same manner and to the same extent as may be
imposed by the Municipality on other occupants, owners or developers of land within the
Municipality, and further that this Agreement does not preclude the Municipality from imposing
such taxes, fees, charges, conditions or other requirements as may be imposed in accordance with
applicable law upon owners, occupants, developers, properties or businesses in the Municipality
(including, without limitation, realty taxes, development charges, conditions of site plan approval
and sewer and water charges).
9. No Liability of OLG
The Municipality acknowledges and agrees that none of OLG and any provincial agency, ministry or
crown corporation, nor any of their respective officers, directors, employees, agents or
representatives shall be liable to the Municipality for or in respect of any claims (including but not
limited to claims based in contract, tort or negligence, active or passive), any cause of action,
demands, losses, liabilities or damages whatsoever (including but not limited to consequential,
exemplary, special, punitive and indirect damages) arising out of, in respect of, or relating indirectly
or directly to this Agreement, the Casino Games, the operation, cessation of operation or malfunction
7
of any systems or equipment, or any injury to or death of any person. Furthermore, the Municipality
releases OLG from any and all losses in respect of the foregoing.
10. Notice
Any notice or other communication permitted or required to be given by OLG to the Municipality
shall be given by either posting the same by prepaid registered mail or by facsimile addressed to the
Municipality at the address or facsimile number, as applicable, appearing in this Agreement or by
personal delivery to the Municipality. Any notice or other communication permitted or required to
be given by the Municipality to OLG shall be given by either posting the same by prepaid registered
mail or by facsimile addressed to OLG at the following address or facsimile number, as applicable:
4120 Yonge Street, Suite 420, Toronto, ON M2P 2B8, facsimile number 416-224-7003. Any notice
posted by pre -paid registered mail shall be deemed to have been received on the third business day
following such mailing and any notice personally delivered or sent by facsimile shall be deemed to
have been received at 5:00 p.m. on the day so delivered or sent by facsimile (if such day is a
business day and if such notice is sent prior to 5:00 p.m. on that day, and if not, on the next
following business day). During periods of a postal strike or of a general interruption of postal
services, any notice shall be given by personal delivery or facsimile hereunder and shall be deemed
to have been received on the second business day following posting of the same.
11. Relationship of Parties
OLG acknowledges the Municipality's role as a host municipality of the Casino Games at the
Location. The Municipality acknowledges and agrees that the Municipality is not an employee, agent
or representative, joint venturer, or partner of OLG, and the Municipality shall not represent itself to
others as being authorized to assume, incur or create any obligation of any kind (express or implied)
on behalf of (or in the name of) OLG or any other provincial agency, ministry or crown corporation,
or purport to bind OLG or any other provincial agency, ministry or crown corporation in any respect.
For greater certainty, the Municipality acknowledges that OLG has, and shall have, the sole right to
determine, from time to time and at any time, the number and type of Electronic Games and Live
Table Games operated at the Location.
12. Severability
If any covenant or term herein or the application thereof to any person or entity, or in any
circumstance, to any extent is held invalid or unenforceable, the remainder of this Agreement or the
application of the term, covenant or condition to any person, event or circumstance, other than those
as to which it is held invalid or unenforceable, will not be affected thereby and each term, covenant
and condition shall be valid and enforceable to the fullest extent permitted by law, except that if on
the reasonable construction, of this Agreement, as a whole, the applicability of the other provisions
presumes the validity and enforceability of the particular provision, the other provisions will be
deemed also to be invalid or unenforceable.
13. Governing Law
This Agreement shall be interpreted and the rights of the parties shall be governed by and construed
in accordance with the laws of the Province of Ontario.
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14. Attornment
Each party irrevocably and unconditionally attorns to the exclusive jurisdiction of the courts of the
Province of Ontario.
15. Recitals
The recitals to this Agreement form part thereof, and this Agreement is to be construed accordingly.
16. Time
Time shall in all respects be of the essence in this Agreement.
17. Counterparts
This Agreement may be executed in counterparts, each of which shall constitute an original and all
of which taken together shall constitute one and the same instrument.
18. Disclosure
The parties acknowledge that OLG is a Crown Agency and that it is subject to the Freedom of
Information and Protection of Privacy Act, R.S.O. 1990, c.F.31, as amended, and that the
Municipality is subject to the Municipal Freedom of Information and Protection of Privacy Act,
R.S.O. 1990, c.M.56, as amended, and that, as a result, each party is required to observe certain
legislative obligations with respect to the disclosure or non -disclosure of information, whether to
government agencies or ministries, members of the public, or otherwise.
19. Modifications
Excluding an amendment permitted under Sections 3(b) and 4(c), no amendment to this Agreement
will be valid or binding unless set forth in writing and duly executed by both of the parties hereto.
No waiver of any breach of any provision of this Agreement will be effective or binding unless made
in writing and signed by the party providing such waiver, and will be limited to the specific breach
being waived.
20. Assignment
No transfer, sale or assignment by the Municipality of this Agreement or the Municipality' s rights
hereunder is valid without the prior written consent of OLG.
21. Benefit of the Agreement
This Agreement will enure to the benefit of and be binding upon the respective successors and
permitted assigns of the parties hereto.
22. Electronic Execution
Delivery of an executed signature page to this Agreement by any party by electronic transmission
will be as effective as delivery of a manually executed copy of this Agreement by such party.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the date
first written above.
ONTARIO LOTTERY AND GAMING
CORPORATION
Per:
Name: Stephen Rigby
Title: President and CEO
I have the authority to bind OLG
THE CORPORATION OF THE CITY
OF PICKERING
Per:
Name: [•]
Title: [•]
c/s
Per:
Name: [•]
Title: [•]
I/We have authority to bind the Municipality.
EXHIBIT A
Calculation of Annual Contribution
For example and by way of illustration only: if the Electronic Games Revenue and Live Table
Games Revenue for an Operating Year is $650 million and $100 million respectively and as further
described in Table A below, then the applicable Annual Contribution for such Operating Year would
be $19,712,500:
TABLE A
Electronic Games
Revenue (in millions)
Live Table Games
Revenue (in millions)
Annual Contribution
Quarterly Payment (in
millions)
Operating Year
$100
$25
[0.0525 x $65) + (0.03
Quarter No. 1 (March
x $35)] + [0.04 x $25]
1 — June 30)
_ $5.4625
Operating Year
$175
$22
[0.03 x $100) + (0.025
Quarter No. 2 (July 1
x $75)] + [0.04 x $22]
— September 30)
= $5.755
Operating Year
$170
$23
[0.025 x $170)] + [0.04
Quarter No. 3
x $23] _ $5.17
(October 1 —
December 31)
Operating Year
$205
$30
[0.025 x $55) + (0.005
Quarter No. 4
x $150)] + [0.04 x $30]
(January 1 — March
= $3.325
31)
Total
$650
$100
$19.7125 .