Calgary Airport – Banff Passenger Rail Project Completes 11 Key Components of First Stage of Design Phase, Potential to Enhance Liricon/Plenary Proposal

Progress facilitates accelerated design completion. Updates include: new economic impact analysis; region-wide transportation solution for Calgary Airport rail hub; potential Edmonton-Calgary High Speed Rail project integration; wildlife impact mitigation approach; hydrogen rollingstock and supply alternatives; municipal, tourism and business stakeholder support; construction strategy; and ridership forecasts. All measures lead to lower development risk and opportunity to reduce or eliminate Provincial financial contributions.

CALGARY, Alberta–(BUSINESS WIRE)–Liricon Capital Ltd. (Liricon) and Plenary Americas (Plenary), a portfolio company of Caisse de dépôt et placement du Québec (CDPQ), are pleased to announce that, working with supportive stakeholders and with the strong support of local business and the community, they have advanced the first stage of Phase 4 (Design) by completing 11 key components of the Calgary Airport – Banff Rail (CABR) project. All of these measures thereby lower the development risk and create the opportunity to reduce or eliminate Provincial financial contributions.

Liricon/Plenary submitted an Enhanced Unsolicited Proposal in November 2021 (the Proposal) to the Government of Alberta’s Ministry of Transportation (Alberta Transportation), Invest Alberta Corporation (Invest Alberta), and the Canada Infrastructure Bank (CIB) to advance the CABR project from Phase 3 (Development) to Phase 4 (Design). Liricon/Plenary reviewed the Proposal with Alberta Transportation and CIB in February and March 2022. Since then, Liricon/Plenary have achieved 11 important milestones including:

• obtaining an improved economic impact analysis,
• developing a solution for region-wide transportation through a Calgary Airport rail hub,
• initiating an operations integration strategy with the potential Edmonton-Calgary High Speed Rail project,
• furthering a wildlife impact mitigations approach,
• investigating hydrogen rolling stock and supply alternatives,
• securing support from affected municipalities/governments,
• solidifying tourism industry support,
• receiving business stakeholder support,
• initiating Stoney Nakoda engagement,
• advancing construction strategy, and
• improving ridership forecasts.

These achievements will decrease the time to complete Phase 4 (Design), reduce development risk and enhance the attractiveness of the Proposal. This progress supports CABR ability to:

• improve the environment including being North America’s first hydrogen-powered passenger train system.
• expand the tourism economy by providing passengers seamless travel experiences with airlines, hotel companies, and hospitality operations
• increase labour mobility through integration with local transit systems and being the foundation upon which to advance complementary new rail systems including Edmonton-Calgary high speed rail
• reduce the impact of vehicles in Banff National Park and support the BANFF NATIONAL PARK NET ZERO 2035 initiative

New analysis indicates that, should Parks Canada adopt policies that encourage Banff National Park visitors to use mass transit options like CABR rather than personal vehicles, there would be an opportunity to reduce or eliminate the proposed Provincial financial contribution.

The further advancement of the CABR project requires the Government of Alberta to match funding of up to $10 million that is being contributed by each of Liricon/Plenary and CIB, to complete second stage of Phase 4 (Design) and achieve a final investment decision.

Liricon/Plenary will then fund the third and fourth stages of the Design Phase (permitting and financial close), budgeted at a total of $75 million.

Upon the completion of each stage of the Design Phase, the Government of Alberta can decide whether to continue to the next stage based on the more detailed information then available to it, and will ultimately make a final investment decision whether to proceed into permitting and the Project’s fifth and final phase, Construction and Implementation.

This process provides the Government of Alberta with multiple opportunities to decide whether to continue to advance the Project, and thereby limits the Government of Alberta’s development risk.

The project is uniquely low risk to Alberta taxpayers since the structure proposed for CABR is a public-private-partnership, which is designed to share commercial risks across multiple partners, including risks relating to capital costs, ridership and revenue.

This P3 structure is different from the conventional government approach of using solely taxpayer money to develop, procure and build public transit projects. In 2016, Canada Infrastructure Bank was established to structure and fund P3 projects which take the commercial risk that government usually is forced to assume under traditional delivery models. The Government of Alberta had the vision to create an Unsolicited Proposal framework to accommodate this new innovative P3 structure.

As one of the first project proposals under this new framework Liricon/Plenary are looking forward to conducting further public engagement and working with the Province, CIB and various capital and engineering partners through the multiple phases required to structure the design and capital contributions to make this project possible.

Video link: Calgary Airport – Banff Rail arriving at Banff Train Station

CABR – Banff Train Station, Press Release 06-27-2022.mp4

Background to Press Release re Calgary Airport – Banff Passenger Rail Project

In November 2021, Liricon/Plenary submitted the Proposal which contemplates development and construction financing from private and institutional capital and the CIB. Once CABR is up and running, CABR’s operating and financing costs will be serviced by revenues from the Project, supported, if necessary, by a financial contribution of up to $30 million / year (2021$) from the Government of Alberta. This financial contribution represents a cap for the benefit of reducing any risk to Government of Alberta and is anticipated to be reduced or eliminated through further refinement of the Project’s design and operating parameters and long-term upside revenue-sharing mechanisms.

The CABR system will operate on a new, dedicated passenger line built within the existing CP Rail freight corridor and will provide high frequency, reliable service between 7 destinations: Calgary Airport, Calgary Downtown, Calgary Keith, Cochrane, Morley (Stoney Nakoda), Canmore and Banff. Net economy class ticket costs for Albertans are estimated to be about $10 from the Airport to Downtown Calgary and $20 from Downtown Calgary to Banff taking into account discounts for entry to the Park.

Leadership from Government of Alberta

The continued support of multiple public and private sector stakeholders is dependent upon the Government of Alberta, as Project Sponsor, also formally supporting the project in order to complete Phase 4 (Design). Without public sector support, infrastructure of this kind simply does not get built. This Design Phase will require an additional 9 months of analysis, further public engagement and engineering at the end of which the Government of Alberta will be able to make a final investment decision.

Alberta’s current decision is whether to match development and design funding of up to $10 million contributed by each of Canada Infrastructure Bank and Liricon/Plenary. The project cannot proceed without the Province’s $10 million commitment, as it is specified by CIB’s process.

The project is uniquely low risk to Alberta taxpayers. The Proposal structures CABR as a public-private-partnership (P3) where the private partner assumes the risks of achieving a commercially reasonable investment, including capital cost, ridership and revenue.

This P3 structure is different from the conventional government approach to developing and building public transit projects. The Canada Infrastructure Bank was established to assess and fund P3 projects that take the commercial risk that Government usually is forced to assume. Government of Alberta had the vision to create an Unsolicited Proposal framework to accommodate this innovative new P3 structure.

CABR Update: First Stage of Phase 4 (Design) Achievements

Since submitting its Enhanced Unsolicited Proposal in November 2021 (the Proposal) to Alberta Transportation, Invest Alberta, and the CIB to advance the CABR project from Phase 3 (Development) to Phase 4 (Design), Liricon/Plenary have achieved 11 important milestones:

• obtaining an improved economic impact analysis,
• developing a solution for region-wide transportation through a Calgary Airport rail hub,
• initiating an operations integration strategy with the potential Edmonton-Calgary High Speed Rail project,
• furthering a wildlife impact mitigation approach,
• investigating hydrogen rolling stock and supply alternatives,
• securing support from affected municipalities/governments,
• solidifying tourism industry support, and
• receiving business stakeholder support,
• initiating Stoney Nakoda engagement,
• advancing construction strategy, and
• improving ridership forecasts.

These achievements will decrease the time to complete Phase 4 (Design) and enhance the attractiveness of the Proposal. This progress clarifies several key components including the potential integration of CABR with local transit systems and tourism operators thereby reducing development risk. Further, new analysis indicates that should Parks Canada adopt policies that encourage Banff National Park visitors to use mass transit options like CABR rather than personal vehicles, there would be an opportunity to reduce or eliminate the proposed Provincial financial contribution.

Additional detail and insight into the progress of each of the above milestones includes:

1. New Economic Impact Analysis

   Since submitting the Proposal, Liricon/ Plenary engaged Mott MacDonald to undertake an economic impact assessment of CABR. For perspective, according to a Tourism Economic Impact Study by Grant Thornton in 2016, the overall province-wide gross output economic impact from Banff and Canmore was approximately $3.145 billion in 2015. Banff and Canmore generate $8.6 million in economic activity each day for Alberta. Provincial taxes and Federal taxes generated from Banff and Canmore were roughly $199 million and $377 million respectively in 2015. CABR will support and grow these figures.

   The Mott MacDonald report indicates that the project will deliver an economic rate of return on the proposed investment by the Government of Alberta of over 6.9 times. The study conservatively forecasts the project’s Benefit Cost Ratio to be 2.8 times and the project is expected to contribute over 9,880 job years of employment during construction and an additional 22,500 jobs and $6.4 billion of gross value added to the Alberta economy once completed. These conservatively estimated economic benefits almost triple when using Liricon/ Plenary’s upside ridership projections underpinning the broad and diverse benefits to the Province.

2. Calgary Airport Complementary Rail Hub

   CABR is a distinct stand-alone project but is also a key part of an overall transportation vision for Alberta which extends beyond the unique benefits to the Calgary region. CABR, as a brownfield project, is capable of being rapidly advanced by Liricon/Plenary to serve as a foundation upon which to develop a rail hub at the Calgary Airport for future greenfield rail projects, including the proposed high speed rail between Edmonton and Calgary and future expansions of Calgary’s light rail network.

   Liricon/Plenary have entered into memorandums of understanding (MOU) with the Calgary Airport Authority and the City of Calgary to advance CABR and integrate with existing and potential future transit systems. Liricon/Plenary have developed a multi-rail plan that includes up to 4 stations on Calgary Airport Authority land which will integrate the complementary contemplated Calgary Transit Airport Transit Line and the potential Edmonton – Calgary High Speed Rail project. Liricon/ Plenary have worked closely with the Airport Authority, City of Calgary and the Prairie Link proponents of high speed rail to develop a technical solution to airport access which is efficient and cost effective for all parties. CABR will provide free service on airport lands to link YYC passengers with intermodal terminals where they can connect with the Calgary public transit network and the future high-speed rail.

3. Edmonton – Calgary High Speed Rail Operations Integration Strategy

   Liricon/Plenary have entered into a MOU with Prairie Link, the proponent behind the potential Edmonton – Calgary High Speed Rail project. CABR and HSR will share the Calgary Airport to Downtown Calgary segment when it is completed. CABR and HSR are complementary, not competitive projects. As CABR is a smaller, brownfield project and HSR is a larger, greenfield project, it is likely that CABR will be completed several years before HSR. HSR will enhance CABR’s long-term economics and CABR will reduce HSR’s capital costs and increases development certainty. From CABR’s perspective, when HSR is completed, HSR will add riders to CABR and vice versa. The Calgary Airport to Downtown segment will be non-electrified heavy rail track interoperable with CP Rail. CABR and HSR will share, on commercial terms, that segment’s interoperable tracks, including accommodating long trains at a station in the Entertainment District once HSR is completed. The two rail projects will substantially increase each other’s ridership potential and economic benefits to the Province.

4. Wildlife Impact Mitigation Approach

   Drawing upon their experience in studying the impact of personal vehicles on wildlife corridors in the Bow Valley, Liricon/Plenary have investigated various mitigation alternatives to minimize CABR’s impact on wildlife. CABR’s preliminary mitigation strategy is based on the research of Colleen St. Clair, Professor of Biology at the University of Alberta. Dr. St. Clair is one of the foremost experts on studying how to mitigate the impacts of trains on wildlife and has done substantial research working with CP Rail on reducing wildlife mortality along the tracks in Banff National Park. Instead of fencing and wildlife crossings, which can lead to habitat loss and wildlife being trapped, Dr. St. Clair’s pioneering work points to the opportunity to use technology including both lighting and sound to warn wildlife of approaching trains. In subsequent stages of CABR’s Phase 4 (Design) the potential of using this new technology and other mitigation strategies will be further pursued.

5. Hydrogen Rolling Stock and Supply Alternatives: First Hydrogen Powered Passenger Train in North America

   Liricon/Plenary have conducted significant research on the potential for CABR to use hydrogen-powered rolling stock. This research has entailed multiple meetings and site visits with the major hydrogen rolling stock providers including Alstom, Siemens, and Sumitomo. While Liricon/Plenary have not selected a rolling stock provider at this time, this study of alternatives has increased Liricon/Plenary’s confidence that hydrogen-powered systems are feasible systems for CABR. In subsequent stages of CABR’s Design Phase, the specific rolling stock provider will be selected.

   Liricon/Plenary have studied potential hydrogen supply alternatives in the Calgary Airport vicinity. In particular, Liricon/Plenary have investigated solutions with major hydrogen supply companies including TC Energy and Suncor. Based on this research, CABR is confident that there will be readily available hydrogen supply for CABR’s hydrogen powered systems for a refueling depot, most likely on Calgary Airport lands.

6. Municipal/Local Governmental Support

   The mayors of Calgary, Cochrane, Canmore, Banff, which together form the Bow Valley Corridor Alliance, sent the Premier of Alberta a letter in January 2022 indicating not only their support for CABR but that they are prepared to make the investment in their communities to integrate CABR into their local transit systems.

   Liricon/Plenary’s MOU with the City of Calgary is focused on station location to provide optimum integration with existing and planned transit systems.

   Cochrane is currently building a transit station in its downtown core adjacent to the rail line which has been designed to be able to accommodate CABR.

   Canmore has retained a consultant to recommend a CABR station location.

   Banff, working with Liricon, has developed a Railway Lands Area Redevelopment Plan (currently advancing through a regulatory process) that transforms the train station into a multi-modal transit hub.

7. Tourism Industry Support

   CABR’s success will be based, in part, on the opportunity to integrate and package its service with other major tourism operations. Liricon/Plenary have been in separate discussions with Canada’s major airlines, Air Canada and WestJet, on the opportunity to integrate CABR’s and the airline’s schedules. The airlines have shared objectives of being able to provide seamless passenger transfer so that the airlines are able to sell passengers tickets all the way to Banff.

   Major Calgary tourism stakeholders, including the Calgary Hotel Association, the Calgary Stampede and the Calgary Municipal Land Corporation’s BMO Convention Centre, see the opportunity to integrate CABR into their guests’ Calgary travel experience.

   At the other end of CABR, six large hospitality businesses representing 70% of the hotel rooms and 70% of food & beverage locations in Banff National Park have expressed the desire to create CABR-based tourist packages. Visitors to the Park will be able to enjoy a journey that combines train travel, hotel accommodations and F&B experiences.

8. Business Community Support

   Major businesses see the opportunity for CABR to be, among other things:
   
   • an innovative model for public-private-partnerships,
   
   • a catalyst for the revitalization of downtown Calgary
   
   • a flagship environmental project.

   The Business Council of Alberta, and the six largest financial institutions operating in Alberta (ATB, BMO, CIBC, RBC, Scotiabank, and TD) have all indicated the potential for CABR to be a transformative project for Alberta.

   The willingness of business stakeholders to consider additional investments which are complementary to the project reinforces the broad and diverse economic benefits which CABR is capable of delivering.

   This community and business support is consistent with polling data (Advanis, 2019) which indicates that 88% of Albertans support the project.

9. Stoney Nakoda Engagement

   There is the potential to have a CABR station located on the Stoney Nakoda reserve. Liricon/Plenary have held preliminary discussions with representatives of the Stoney Nakoda to begin to understand their potential interest in the project and the possibility of locating a station on the reserve. During this early dialogue, the Stoney Nakoda representatives identified the opportunity that a CABR station could help anchor an Indigenous Cultural Tourism Centre. This Indigenous Cultural Tourism Centre could draw not only on the 4.2 million annual visitors to Banff National Park but also the 5.3 million annual visitors to Kananaskis. The Alberta Indigenous Opportunities Corporation, whose mandate was expanded in March, 2022, to include transportation infrastructure projects, has indicated interest in helping to finance Indigenous investments associated with CABR. Formal consultation with the Stoney Nakoda will begin during the next stage of the Design Phase.

10. Construction Strategy

    To minimize the impact of construction on the ecosystem, Liricon/Plenary, working with Mott MacDonald, are developing a construction strategy that relies on using the existing CP Rail corridor to deliver construction personnel and material and thus minimize the requirement for new construction access roads.

    In particular, the construction of the twinned track within Banff National Park will be conducted entirely within the CP Rail corridor and will not require the disturbance of Park lands. Parks Canada is an important stakeholder in CABR and thus can participate in its Design Phase and take steps required to advance the project and ensure its success.

11. Updated Ridership Forecasts

    Since submitting the Proposal, Liricon/Plenary commissioned one of the world’s leading mass transit ridership and revenue consultants, Steer, to review the ridership and revenue work completed to date and to undertake the full investment grade ridership and revenue study should the Province formally support the project and allow it to proceed further into the Design Phase.

    To assist Steer in gathering relevant data, Liricon/ Plenary worked with the assistance of the hoteliers, restauranteurs and service providers who have the closest understanding of the Banff tourism market.

    Steer’s report provides strong support for the ridership and revenue forecasts contained in the Liricon/Plenary unsolicited proposal. With appropriate policy incentives, CABR could carry over 11 million passengers per year by 2035, over five times the number forecast in the original conservative base case.

    Most of this increase in ridership is because of the attractiveness of the direct fast rail link between the airport and Downtown, which using the success of Vancouver’s Canada Line as an indicator, will carry over 2.4 million airport passengers per annum (20% market share) and 4.5 million airport employees per annum (12% market share). This will support YYC’s growth, land use and diversification plans well into the future.

    An estimated 1.34 million Out-of-Province passengers to Banff will pay premium fares for a service level that enhances their visitor experience and will help subsidize fares for a similar number of Alberta residents who will use the train for labour mobility and/or to visit Banff National Park economically while leaving their personal vehicles behind.

    (Steer’s report is based on 2019 (pre-Covid) statistics regarding visitation to Banff National Park. Early indications point to visitation to the Park being higher in 2022 than 2019’s record number. According to the Town of Banff, vehicles entering the Town of Banff during 2022’s May long-weekend – typically the start of the summer rush – were 8% higher than in 2019. As a signal of visitors’ desire to have a pedestrian-centric experience, visitors’ use of the Banff Train Station’s free intercept parking jumped roughly 50% in 2022. For the summer of 2022, an additional 250 parking stalls (the West Lot) at the Banff Train Station are being provided, which together with 500 stalls in the East Lot brings the total number of free intercept stalls at the Train Station to 750. According to the Town of Banff, the average occupancy of these 750 stalls has been 80% in May and June 2022.)

Potential Alberta Performance Payment Reduction

Under the Proposal, ridership and revenue is solely a Liricon/ Plenary risk yet the upside can be shared with Government of Alberta. This proposal was based on CABR capturing approximately 20% of the total 2019 visitors to the Park. Importantly, Steer acknowledges the conditions under which the Liricon/ Plenary upside ridership and revenue projections could be achieved. In particular, Parks Canada has the opportunity to use the Park entry fee to encourage a transportation mode shift from personal vehicles to mass transit (eg CABR) and sustainable intra-Park transit by increasing the entry fee for vehicles and not charge visitors arriving by mass transit.

Contacts

Jan Waterous

Managing Partner

Liricon Capital Ltd.

jan.waterous@liricon.com

Stephanie Williamson

Vice President, Corporate Affairs

Plenary Americas

Stephanie.Williamson@plenarygroup.com

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