Sauble Community School – Council should exercise 20 year contract renewal option (4-23)

July 14, 2014

Members of Council TSBP

Re: July 15 2014 agenda item 10.1 – Proposal to sign six-month Extension Agreement for the Amabel Sauble Community School.

I write to appeal to you not to pass By-Law 67-2014 (By-Law to Authorize the Mayor and Clerk to Sign an Extension Agreement for the Amabel Sauble Community School)

The 1995 to 2014 agreement is a great deal

The 1995 to 2014 agreement between TSBP and the school board was and is a great deal for the people of TSBP. It sets out very clearly who pays what operating costs, and it does not tie each party’s operating costs to any ownership percentages or usage patterns. The agreement is very favourable to the taxpayers of TSBP.

The current agreement can be renewed for 20 years – unilaterally

While the current agreement expired on July 1, 2014, there is a very important renewal option built right into that agreement. Regarding renewal, paragraph 11.0 of the agreement reads:

11.0 TERM OF AGREEMENT

This agreement shall be effective from the date of its execution by the parties hereto and it shall continue in force until July 1st in the year 2014. Either party hereto shall have the privilege of renewing this agreement for a further term of 20 years upon the same conditions as are contained herein subject to any modifications that may have occurred pursuant to this agreement.   Such renewal must be requested in writing within six (6) months of the expiry date of this agreement. Subsequent to any renewal period, this agreement shall continue thereafter from year to year until either party gives notice in writing to the other party that they wish to terminate the agreement on its next anniversary effective on July 1st in the following year.” (emphasis added by CG)

 You don’t need to be a contract lawyer to understand the sentence: “Either party hereto shall have the privilege of renewing this agreement for a further term of 20 years upon the same conditions as are contained herein”. It is plain, simple, unambiguous English. Simply put, if TSBP wants to continue the contract as it is for another 20 years, all we have to do is inform the School Board that we are renewing.   TSBP can decide unilaterally to continue the existing contract for another 20 years. The school board cannot veto such a decision.

 Contrary to Misters Close and Turner (June 17), the “privilege” of renewing is exactly the same as a “right” to unilaterally renew.

 Renewal option is available until December 31, 2014

 Mr. Close said (July 2) that any 20 year renewal pursuant to paragraph 11 would have had to have been done within the period of six months prior to the end of the agreement on July 1, 2014.

 Mr. Close is mistaken.   Contrary to Mr. Close, the agreement clearly allows six months after the expiry date (of July 1, 2014) to exercise the unilateral 20 year renewal option.

 Here is from Paragraph 11:

 Such renewal must be requested in writing within six (6) months of the expiry date of this agreement.

 All benefits, no downside to unilateral 20 year renewal

 There is a huge benefit in exercising the 20 year renewal option. The 20 year renewal will require that the school board pay the agreed part of operating costs for another 20 years. And if they have to pay the operating costs for 20 years, it will make no sense for them to shut down the school operation. Students, parents, all TSBP residents will benefit from TSBP exercising its 20 year renewal option.

 There is no downside. If the school board has to pay agreed costs it is very unlikely that they will even consider shutting down the school operation. And in the unlikely event that support from the town is needed to keep the school operating as a school, there is nothing in the 20 year renewal route that prevents TSBP from at any time making a grant to the school.

 The proposed 6 month “extension agreement”

 In the July 15, 2014 agenda package there is a proposed 6 month extension agreement and a by-law to give the Mayor and Clerk authority to sign that agreement. I recommend against this by-law, for two reasons:

 Reason 1 – the six-month extension agreement is unnecessary

 Council should exercise the 20 year renewal option. It is completely unnecessary to have a six month extension.

 And if council must have a bit more time to be convinced that we indeed have the “privilege” of a unilateral 20 year renewal, then we can operate without an agreement for a few more weeks, or even a month. Recall that we have until December 31 to exercise the 20 year renewal. There is no reason to believe that over the next few weeks or months either party will do anything less than carry on operations the way they have in the past, even without an agreement in place.

 Reason 2 – the six-month extension could void the 20 year extension option

 I say “could void”, but I believe it actually “would void” the 20 year extension option. If the 20 year option is voided it would be huge loss and a great disservice to all TSBP residents.

 I believe the six month extension will void the 20 year renewal option. But even if it is not certain that the 6 month extension would void the 20 year renewal option, why even take the chance?   There is no benefit to the six-month renewal, and serious potential downside.

 And note that the proposed 6 month extension goes to January 1, 2015, at which point the 20 year renewal option would definitely disappear. So if the six-month extension were to be used to the end of its term on January 1, 2015, the 20 year option would definitely be gone.

 Or make clear that 6 month extension does not void paragraph 11

 In my view, rejecting the 6 month option and exercising the 20 year option is the only sensible way to proceed. But if for some reason council absolutely must take the 6 month agreement route, then council should at least put in the six month agreement that nothing in the six-month agreement alters in any way TSBP’s “right” to unilaterally extend the 1995 – 2104 agreement for another 20 years pursuant to paragraph 11.

 Summary:

 The proposed six-month renewal is unnecessary, provides no benefit to anyone, and voids or risks voiding a very fine 20 year renewal option. The six-month extension should be abandoned.   If the six-month cannot be abandoned, at least council should add a clause to make sure that the 20 year option is not voided by signing the six-month extension. And then exercise the 20 year option as soon as possible.

 

Craig Gammie

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