1. Biotechnology Center Amendments Prepared For: City Council Approval Date: December 12, 2006 Prepared By: Myron Borys Vice President, Economic Development

2. www.edmonton.com December 12, 2006 BBDC AmendmentPage 2 The Opportunity – a recap A known gap in regional facilities exists creating a barrier to growth for emerging biotech companies. The biotech industry is a knowledge based growth industry –Edmonton has 60 biotech companies employing 2,000 people – up from 17 companies ten years ago –Global industry is $60 B, growing at 25% annually Demand exists in the Edmonton area –2003 Market Feasibility Study showed demand for 68,000 sf –Six local companies have pre-leased 31,000 square feet of space in the BBDC Private sector developers see the Biotech sector as too risky without lease guarantee U of A ARC Capital Health Fed/Prov Gov’t Isotechnika BioMS Biomira Virexx Maxima Multi-Tenant Wet Lab Facilities A window of opportunity exists to solve a critical industry need. RESEARCHCOMMERCIAL GAP

3. www.edmonton.com December 12, 2006 BBDC AmendmentPage 3 Regional Positioning As companies evolve their space needs change – the Edmonton region has a distinct gap after the incubator stage – a multi-tenant wet lab.

4. www.edmonton.com December 12, 2006 BBDC AmendmentPage 4 Recommendations 1.That the $1,017,000 allocated towards land be re-allocated towards building upgrades. This is a condition of Provincial funding Funds have been reserved since 2004 in Land Enterprise and there is no budget implication 2.That Council accept the new budget profile for project 05-99-3002. Project is in approved 2007 capital budget Lower borrowing requirements for the City of Edmonton will be reflected

5. www.edmonton.com December 12, 2006 BBDC AmendmentPage 5 The Proposal Lease an existing building in the Edmonton Research Park from the Government of Alberta for 25 years –Nominal Rent ($1/year) for the first 5 years –50/50 share of profits in the remaining 20 years –EEDC responsible for all capital upgrades –EEDC responsible for all operations and sub-leases –EEDC to negotiate sub-lease with potential tenants Total space available is comparable to original proposal –Proposed Building: 67,722 square feet overall 50,769 square feet leasable (50/50 lab and office) –Most recent design was for 67,000 square foot structure consisting of 12,000 square feet of shared lab and 55,000 square feet of multi-tenant space

6. www.edmonton.com December 12, 2006 BBDC AmendmentPage 6 Since December 2004 All conditions of the December 14, 2004 City Council approval have been met: –Secured $2.5M in funding from Western Diversification –Secured $2.5M in funding from Alberta Innovation and Science –Pre-leased over 50% of the multi-tenant space –City of Edmonton has allocated $1,017,000 towards land and secured up to $13,000,000 in loans towards the project Tenants Committed – Dec. 2006 (square feet) Potential Lead Tenant28,000 Helix BioPharma5,000 Novokin6,000 Sci-Med5,000 Scanimetrics8,000 KMT Hepatech3,000 Keystone Labs2,000 CanBiocin2,000 TOTAL59,000 Note: demand exceeds available space, but some tenants may drop off. Tenants Committed – Dec. 2006 (square feet) Potential Lead Tenant28,000 Helix BioPharma5,000 Novokin6,000 Sci-Med5,000 Scanimetrics8,000 KMT Hepatech3,000 Keystone Labs2,000 CanBiocin2,000 TOTAL59,000 Note: demand exceeds available space, but some tenants may drop off.

7. www.edmonton.com December 12, 2006 BBDC AmendmentPage 7 Proposed Funding Breakdown Funding SourceDescriptionValue Province of Alberta – Alberta Innovation and Science Funding to be applied towards leasehold improvements $2,500,000 Government of Canada - Western Economic Diversification Funding towards building renovations $2,500,000 City of Edmonton Funding towards leasehold improvements and building renovations $1,017,000 Self-liquidating debentures and loan to EEDC Funding towards all project costs. Includes $1,000,000 of contingency. $6,483,000 TOTAL$12,500,000

8. www.edmonton.com December 12, 2006 BBDC AmendmentPage 8 Expected Cash Flows Cash Flow ItemDescriptionFirst Full Year Values Total Revenues (based on $10/sf plus operating and utilities) Includes rent, management fee, common area expense, and utilities $1,459,298 Operating costsIncludes operating and maintenance, utilities, insurance, etc. $996,637 Vacancy AllowancesRent and occupancy cost based on 5% vacancy $71,661 Debt repaymentInterest and principal on outstanding loan of $5,500,000 (excluding $1,000,000 contingency) $391,000 Net Cash Flow$0 (Breakeven) Capital ReserveAllocation over the course of 10 years to create a $2,000,000 reserve fund for expected capital upgrades. $2,000,000 In first full year of operation, Biotech Center expected to operate on a breakeven basis

9. www.edmonton.com December 12, 2006 BBDC AmendmentPage 9 Justifications Demand exists –Pre-lease commitments exceed available space Economic Impact –Biotech Center will grow and retain companies in a key sector –Commercialization of U of A research Fills Infrastructure Gap –Enterprise Center downtown cannot accommodate certain tenants –Need for graduation facilities for incubators Too Risky for Private Sector –Without lease guarantees, private sector developers will not build this type of facility

10. www.edmonton.com December 12, 2006 BBDC AmendmentPage 10 Next Steps Revise funding agreements –City of Edmonton, Western Economic Diversification, Alberta Innovation and Science Sign binding offers to lease with tenants Negotiate 25 year lease with Province Begin design and construction planning –Some urgency to spend WD funds