1023-00001 · Ironside Capital Management LP · Diligence

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MEMORANDUM

PRIVILEGED AND CONFIDENTIAL ATTORNEY WORK PRODUCT

To: Marcus J. Calloway, Founder & Chief Investment Officer, Ironside Capital Management LP Renata Obasi, Senior Managing Director, Infrastructure, Ironside Capital Management LP

From: Theresa Kim, Lead Associate, Calderwood & Harkness LLP Owen Fischer, Working Associate, Calderwood & Harkness LLP

Date: August 25, 2022

Re: Due Diligence — Real Property Holdings, Easements, Rights-of-Way, and Land-Use Entitlements of Cascadia Renewables Holdings, Inc. and Subsidiaries

Matter No.: 1023-00001

Reviewed by: Pamela Cross, Responsible Partner, Calderwood & Harkness LLP

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I. Executive Summary

This memorandum summarizes the findings of Calderwood & Harkness LLP ("C&H") from its review of the real property holdings, easements, rights-of-way, and land-use entitlements held by Cascadia Renewables Holdings, Inc. ("Cascadia" or "CRH"), an Oregon corporation headquartered at 1100 SW Sixth Avenue, Suite 1800, Portland, OR 97204, and its operating subsidiaries across the states of Oregon, Washington, and Idaho. This review has been conducted in connection with Ironside Capital Management LP's ("Ironside") proposed $300 million commitment to ICM Cascadia Co-Invest, LP (the "Vehicle"), which will co-invest alongside Meridian Infrastructure Partners Fund IV, LP ("Meridian Fund IV") in the 100% equity acquisition of Cascadia at an aggregate enterprise value of $1,950,000,000 (the "Transaction"). The implied EV/EBITDA multiple is approximately 14.1x, based on Cascadia's fiscal year 2021 adjusted EBITDA of approximately $138 million.

The scope of this memorandum encompasses all real property associated with Cascadia's portfolio of 14 hydroelectric facilities, 6 wind farms, and 3 water-treatment concession facilities. Together, these 23 operating facilities are situated across approximately 87 fee-owned parcels and 18 leased parcels, supported by approximately 142 individual easement and right-of-way instruments. The aggregate fee-owned acreage is approximately 34,200 acres, with an additional approximately 11,500 acres held under ground lease.

Overview of Key Findings. The Cascadia real property portfolio is extensive and generally well-documented. Chains of title are predominantly clean, and the operating subsidiaries hold adequate property rights to support the ongoing operations of all 23 facilities in the portfolio. However, our review has identified several issues that warrant attention prior to or in connection with the closing of the Transaction:

• Easement Renewals: Three flowage easements associated with hydroelectric reservoir operations are approaching their renewal periods within the next five to seven years. While not immediately actionable, these renewals should be tracked and proactively managed post-closing.

• Encroachments at Wind-Farm Sites: Two wind-farm sites (designated W-2 in Klickitat County, Washington, and W-5 in Wasco County, Oregon) exhibit minor but material encroachment issues where turbine foundations or access roads extend beyond the boundaries of recorded easements. Corrective easements or boundary-line adjustments should be obtained prior to closing.

• Interrelationship of Real Property Rights and Municipal Concession Agreements: The three water-treatment concession facilities derive their real property access and use rights from the underlying concession agreements. Most notably, the Bull Run Filtration Project concession with the Portland Metropolitan Water District (with approximately $64 million in annual revenue) is subject to a recent notice of intent to renegotiate, which creates uncertainty regarding the corresponding real property rights. This is the single most significant real property risk identified in this review.

• Change-of-Control and Assignment Restrictions: A limited number of property instruments—including two access-road easements and two wind-farm ground leases—contain change-of-control or assignment provisions that require grantor or landlord consent. These consents should be obtained prior to closing or addressed through appropriate EPA protections.

• Survey Status: ALTA/NSPS surveys for six of the 23 major facility sites are more than five years old. Updated surveys are recommended, particularly at the wind-farm sites where encroachment issues have been identified.

Data Sources. This memorandum is based on our review of the following principal data sources: (i) documents produced in the Cascadia data room (Room 4 — Real Property) as of August 20, 2022; (ii) preliminary title reports and title commitment packages from Cascadia's title insurer; (iii) survey summaries and ALTA/NSPS survey plats; (iv) Phase I and Phase II environmental site assessments prepared by Clearwater Environmental Consulting Inc. (cross-referenced for overlap with real property matters); (v) county recorder records in the applicable jurisdictions; (vi) publicly available GIS data; and (vii) Cascadia management's responses to C&H's written diligence questionnaire dated July 15, 2022, and supplemental responses dated August 10, 2022.

Companion Memoranda. Real property environmental liabilities and compliance matters—including analysis of wetland delineations, endangered-species habitat designations, contamination issues, and remediation obligations—are addressed separately in the C&H Due Diligence Memorandum: Cascadia Environmental Liabilities and Compliance (dated August 29, 2022), which incorporates the findings of Clearwater Environmental Consulting Inc.'s Phase I and Phase II assessments. Regulatory permits and licenses associated with the real property, including FERC hydroelectric licenses (under 16 U.S.C. §§ 791a–823d) and state utility permits, are addressed in the C&H Due Diligence Memorandum: Cascadia Regulatory Permits and Licenses (dated August 18, 2022).

II. Methodology and Scope of Review

A. Documents Reviewed

C&H's real property review encompassed the following categories of documents and information sources, all of which were produced in or supplemental to the Cascadia data room (Room 4 — Real Property):

1. Title Commitment Packages and Preliminary Title Reports. Twenty-three (23) title commitment packages were received from Cascadia's title insurer, Adriatic Casualty Group, covering all fee-owned parcels across the portfolio. Each package included preliminary title reports, copies of recorded title exceptions, and proposed policy terms and premiums.

2. ALTA/NSPS Land Title Surveys. ALTA/NSPS surveys were available for 17 of the 23 major facility sites. The surveys were prepared by various licensed surveyors in Oregon, Washington, and Idaho and generally comply with the 2021 Minimum Standard Detail Requirements for ALTA/NSPS Land Title Surveys (or the applicable prior standard for older surveys). Six surveys are older than five years, a matter discussed further in Section VII.B below.

3. Recorded Deeds and Instruments of Conveyance. We reviewed copies of all recorded warranty deeds, special warranty deeds, bargain and sale deeds, and other instruments of conveyance through which the various Cascadia subsidiaries acquired fee title to the parcels in the portfolio. Where gaps in the data room record existed, we cross-referenced preliminary title reports and county recorder indices.

4. Easement Agreements, Licenses, and Rights-of-Way Grants. We reviewed approximately 142 individual easement agreements, license agreements, and rights-of-way grants associated with the Cascadia facilities. These instruments encompass a wide range of purposes, including water conveyance, flowage rights, transmission-line corridors, access roads, pipeline corridors, underground collector-line corridors, meteorological tower sites, and construction staging areas.

5. Ground Leases and Land-Lease Agreements. We reviewed all 18 active ground lease and land-lease agreements under which Cascadia subsidiaries hold possessory interests in real property. Fourteen of these leases are associated with wind-farm operations on private agricultural land; the remaining four are associated with hydroelectric and water-treatment operations.

6. Concession Agreements and Related Real Property Access Provisions. We reviewed the real property access, use, and improvement provisions of the three water-treatment concession agreements, including the Bull Run Filtration Project concession with the Portland Metropolitan Water District. Detailed analysis of the concession agreements as material contracts is provided in the C&H Due Diligence Memorandum: Cascadia Material Contracts Summary (dated August 22, 2022).

7. County and Municipal Zoning and Land-Use Permits. We reviewed zoning certifications, zoning maps, and land-use permit files for all 23 facility sites, including conditional use permits, special-use permits, and development approvals.

8. Federal Land-Use Authorizations and FERC-Related Property Rights. We reviewed four Bureau of Land Management ("BLM") and United States Forest Service ("USFS") special-use permits and two federal rights-of-way grants, each associated with hydroelectric facilities that are partially situated on federal lands. We also reviewed the FERC-related property rights provisions in the applicable FERC hydroelectric licenses. The pending FERC Section 203 transfer application (FERC Docket Number EC22-143-000, filed October 19, 2022) is addressed in the regulatory permits memorandum.

9. State and Federal Dam-Safety Inspection Reports. Where relevant to the condition of real property, we cross-referenced state and federal dam-safety inspection reports for the hydroelectric facilities.

10. Environmental Site Assessments. Phase I and Phase II environmental site assessments prepared by Clearwater Environmental Consulting Inc. were cross-referenced for matters relevant to the real property analysis, including identification of recognized environmental conditions, wetland delineations, and regulatory use restrictions.

B. Jurisdictions Covered

The Cascadia real property portfolio spans three states and multiple counties within each state. Our analysis has been conducted with reference to the real property laws of each applicable jurisdiction. The specific counties covered are as follows:

• Oregon (primary jurisdiction): Multnomah County, Clackamas County, Hood River County, Wasco County, Deschutes County, Klamath County, Josephine County, and Marion County. Oregon is the domicile state for CRH and the jurisdiction in which the majority of the portfolio's real property is situated.

• Washington: Klickitat County, Skamania County, and Benton County. Washington properties are associated with both hydroelectric and wind-farm operations.

• Idaho: Ada County, Canyon County, and Twin Falls County. Idaho properties are associated exclusively with hydroelectric operations.

C. Limitations and Qualifications

The following limitations and qualifications apply to this memorandum and should be borne in mind when evaluating our findings:

1. Data Room Cut-Off. This review is based on documents produced in the Cascadia data room as of August 20, 2022. Documents produced after that date have not been incorporated into this analysis unless specifically noted. We understand that the data room remains open and that additional documents may be produced.

2. No Independent Title Searches. C&H has not conducted independent title searches in any county recorder's office. Our title analysis is based on the preliminary title reports and title commitment packages provided by Cascadia's title insurer, supplemented by our review of recorded instruments produced in the data room. While we believe these sources are generally reliable, independent title searches would provide an additional layer of verification.

3. Survey Limitations. As noted above, ALTA/NSPS surveys for six facilities are more than five years old. Conditions on the ground may have changed since these surveys were prepared. We recommend that updated surveys be commissioned prior to closing, particularly at the wind-farm sites where encroachment issues have been identified at other facilities in the portfolio.

4. Jurisdictional Scope. Our state-by-state legal analysis is limited to the real property laws of Oregon, Washington, and Idaho. To the extent that federal law (including FERC regulations, BLM and USFS regulations, and federal environmental law) intersects with real property matters, we have noted the relevant issues but have deferred detailed federal regulatory analysis to the companion memoranda identified in Section I above.

5. No Appraisals. We have not reviewed appraisals of any real property in the portfolio, and valuation matters are outside the scope of this memorandum. Ironside's independent valuation advisors should conduct such analysis as they deem appropriate.

6. Reliance on Management Representations. In certain instances, we have relied on representations made by Cascadia management in response to C&H's diligence questionnaire. Where management representations address factual matters that we have been unable to independently verify (such as the informal acquiescence by a neighboring landowner to an encroachment), we have noted the limitation.

III. Summary of Real Property Portfolio

A. Overview and Classification

The Cascadia real property portfolio can be classified into four principal categories: (i) fee-owned properties, (ii) leased properties, (iii) government-granted property rights, and (iv) concession-related property rights. The following subsections provide an overview of each category.

1. Fee-Owned Properties

Cascadia and its operating subsidiaries hold fee simple title to approximately 87 parcels across the three states. These parcels have an aggregate acreage of approximately 34,200 acres, the vast majority of which is associated with hydroelectric and wind-farm operations. Fee ownership provides Cascadia with the strongest form of tenure security and, in most cases, reduces the risk of third-party interference with facility operations. The fee-owned parcels include dam sites, reservoir lands, powerhouse sites, switchyards, operations and maintenance buildings, substations, collector-system infrastructure, and certain wind-turbine sites.

Title to the fee-owned parcels is vested in various Cascadia subsidiaries, consistent with the organizational structure of the Cascadia group. The specific vesting entities for each parcel are identified in Appendix A hereto and are cross-referenced to the organizational chart set forth in the C&H Due Diligence Memorandum: Cascadia Corporate Structure and Subsidiaries (dated August 8, 2022). As is typical for infrastructure holding companies of this scale, Cascadia has organized its subsidiaries on a facility-by-facility or regional basis, with each operating subsidiary holding the real property associated with its respective facilities.

2. Leased Properties

Cascadia holds possessory interests in an additional approximately 11,500 acres under 18 active ground lease and land-lease agreements. Fourteen of these leases are associated with wind-farm operations on private agricultural land, reflecting the predominant industry practice of leasing rather than purchasing agricultural land for wind-energy development. The remaining four leases are associated with hydroelectric and water-treatment operations.

The weighted-average remaining lease term across the 18 active leases is approximately 24 years, with renewal options that, if exercised, would extend the effective lease term to approximately 40 to 50 years. The availability and terms of these renewal options vary by lease and are discussed in greater detail in Section V.B below and in Appendix B hereto. The long remaining terms and available renewal options generally provide adequate security of tenure for the economic life of the facilities.

3. Government-Granted Rights

A subset of Cascadia's real property rights is derived from authorizations granted by federal and state governmental agencies. These include:

• Federal Land Authorizations (BLM and USFS). Four special-use permits and two rights-of-way grants issued by the BLM and the USFS, each associated with hydroelectric facilities that are partially situated on federal lands. These authorizations have terms that are generally coterminous with the corresponding FERC hydroelectric license terms (typically 30 to 50 years) and are subject to periodic review and compliance with federal environmental requirements.

• State-Granted Easements and Licenses. Seven instruments from Oregon and Washington state agencies granting Cascadia subsidiaries easements, licenses, or other property rights on state-owned lands. These instruments are associated with transmission corridors, access roads, and other infrastructure supporting hydroelectric operations.

• Municipal and County Licenses. Various access and utility licenses granted by municipal and county authorities in connection with Cascadia's operations. These are generally short-term and revocable instruments that provide supplemental access or utility rights.

Transfer of the federal special-use permits and rights-of-way grants requires the consent of the issuing agency. Historically, such consent has been granted in connection with FERC Section 203 transfer approvals, and we do not anticipate material difficulty in obtaining consent in connection with the Transaction. However, the timeline for federal agency consent may extend beyond the anticipated closing date, and appropriate provisions should be included in the equity purchase agreement (the "EPA") to address this contingency.

4. Concession-Related Property Rights

Cascadia's three water-treatment concession facilities operate under long-term concession agreements with municipal counterparties. The real property access, use, and improvement rights associated with these facilities are derived from and are generally coterminous with the concession agreements. This structure means that the real property rights are inextricably linked to the continuation of the concession relationships—if a concession agreement expires, is terminated, or is materially modified, the corresponding real property rights would be similarly affected.

The most significant of these concession-related property rights is the license and access agreement associated with the Bull Run Filtration Project concession with the Portland Metropolitan Water District. This concession, originally executed in approximately 2018, has a 40-year term and generates annual revenue of approximately $64 million. Cascadia holds a license and access agreement granting exclusive use of approximately 28 acres of Water District land for the filtration facility, associated buildings, treatment basins, and access roads. As discussed in detail in Section VI.B below, the Portland Metropolitan Water District has notified Cascadia of its intent to renegotiate this concession, creating uncertainty regarding the corresponding real property rights.

B. Property Portfolio by Asset Type

The following table summarizes the real property portfolio by facility type, indicating the number of facilities, fee-owned parcels, leased parcels, easements and rights-of-way, and states in which facilities are located:

The hydroelectric segment represents the largest component of the portfolio by both parcel count and acreage, reflecting the inherently land-intensive nature of hydroelectric operations (including dam sites, reservoirs, flowage areas, and transmission corridors). The wind-farm segment, while having fewer fee-owned parcels, accounts for the majority of leased acreage due to the predominance of the land-lease model for wind-energy development. The water-treatment segment is the smallest component by real property footprint but is significant in revenue contribution, particularly the Bull Run Filtration Project.

A complete schedule of all fee-owned parcels, leased parcels, and easements and rights-of-way is provided in Appendices A through C, respectively.

IV. Hydroelectric Facilities — Real Property Analysis

A. Overview

Cascadia's 14 hydroelectric facilities are located across Oregon, Washington, and Idaho, with operational capacities ranging from approximately 5 MW to 120 MW per facility. The combined installed capacity of the hydroelectric portfolio is approximately 620 MW. The real property holdings associated with these facilities include dam sites, reservoirs and associated flowage areas, penstocks, powerhouses, switchyards, transmission line corridors, access roads, and ancillary operations and maintenance facilities.

There is significant overlap between the real property rights associated with the hydroelectric facilities and the boundaries of the FERC hydroelectric licenses under which these facilities operate. FERC licenses typically define a "project boundary" that encompasses all lands necessary for the operation and maintenance of the licensed project. The real property instruments reviewed in this memorandum provide the underlying legal basis for Cascadia's use and occupancy of lands within these project boundaries. The FERC licenses themselves are analyzed separately in the C&H Due Diligence Memorandum: Cascadia Regulatory Permits and Licenses (dated August 18, 2022), including the pending FERC Section 203 transfer application (FERC Docket Number EC22-143-000, filed October 19, 2022).

B. Fee-Owned Properties

Cascadia and its subsidiaries hold fee simple title to approximately 52 parcels associated with the hydroelectric facilities. These parcels encompass the critical operational components of each facility, including dam sites, powerhouse sites, switchyard sites, and portions of reservoir lands. The concentration of fee ownership at these critical infrastructure sites provides strong security of tenure and minimizes the risk that third-party actions could disrupt facility operations.

Our review of the chains of title for the fee-owned hydroelectric parcels reveals that the titles are generally clean and well-documented. Many of the parcels were acquired decades ago—in some cases during the original development of the hydroelectric facilities—and the historical chain of conveyances is typically straightforward and well-recorded in the applicable county recorder's offices.

We note one exception: Facility H-7, located in Klamath County, Oregon, shows a historical cloud on title related to a 1978 boundary dispute between Cascadia's predecessor-in-interest and an adjacent landowner. The dispute concerned the precise location of the boundary between the facility parcel and an adjacent timber parcel, with the adjacent landowner claiming approximately 3.2 acres within the H-7 parcel boundaries. This dispute was resolved by a quiet-title action in 1983 (Case No. 83-CV-0247, Circuit Court of Klamath County, Oregon), in which the court entered judgment in favor of Cascadia's predecessor confirming the boundary as depicted on the original survey. Cascadia's title insurer, Adriatic Casualty Group, has confirmed its willingness to insure over this matter without exception in the proposed owner's policy, based on the final judgment in the quiet-title action and the absence of any subsequent challenge. We are satisfied that this historical matter does not present a material risk to Ironside's investment.

C. Federal Land Authorizations

Four of Cascadia's 14 hydroelectric facilities are partially situated on federal lands administered by the BLM or the USFS. For these facilities, Cascadia's right to use and occupy the federal lands is established through special-use permits and rights-of-way grants issued by the applicable federal agency. Our review of these instruments reveals the following:

• Special-Use Permits (4 instruments). Each of the four special-use permits authorizes Cascadia (through the applicable subsidiary) to use designated federal lands for hydroelectric facility purposes, including the maintenance and operation of dams, penstocks, transmission lines, and access roads. The permits have terms that are coterminous with the corresponding FERC hydroelectric license terms, which generally range from 30 to 50 years. The permits are subject to periodic review (typically on a five-year cycle) and require ongoing compliance with federal environmental requirements, including the National Environmental Policy Act ("NEPA") and the Endangered Species Act ("ESA").

• Rights-of-Way Grants (2 instruments). Two rights-of-way grants authorize transmission-line corridors across federal lands connecting hydroelectric facilities to grid interconnection points. These grants are also coterminous with the applicable FERC license terms and are subject to similar environmental compliance requirements.

• Transfer Requirements. All six federal land authorizations require the consent of the issuing agency for transfer to a new holder. In practice, the BLM and USFS have historically granted such consent in connection with FERC Section 203 transfer approvals, as the agencies coordinate their review processes with FERC. We recommend that applications for agency consent be filed promptly following the execution of the EPA and that the EPA include appropriate provisions to address the possibility that agency consent may not be obtained prior to the anticipated closing date. Cascadia management has confirmed that it has had preliminary discussions with the BLM and USFS regarding the anticipated transfer and that no objections have been raised.

D. Easements and Rights-of-Way

Approximately 78 easement and right-of-way instruments are associated with the hydroelectric operations. These instruments serve range purposes critical to the operation and maintenance of the facilities, including:

• Water Conveyance Easements. Easements for the conveyance of water through canals, flumes, and pipelines connecting water sources to penstocks and powerhouses. These easements are foundational to the operation of several run-of-river and diversion-type hydroelectric facilities.

• Flowage Easements. Easements permitting the inundation of lands adjacent to dam sites for reservoir operations. Flowage easements are critical for the operation of all 14 reservoirs in the portfolio. Our review confirms that flowage easements are in place for all 14 reservoirs, providing Cascadia with the legal right to maintain water levels at the designed elevations.

• Transmission-Line Easements. Twelve transmission-line easements connect facilities to grid interconnection points. All twelve are current and in good standing, with no pending disputes or challenges identified.

• Access-Road Easements. Nine easements over private land provide access to hydroelectric facility sites. Access-road easements are particularly important for facilities located in remote or mountainous terrain where public road access is limited.

• Pipeline Corridor Easements. Easements for underground and above-ground pipeline corridors associated with water conveyance and penstock infrastructure.

Flowage Easement Renewals. We note that three flowage easements are approaching their renewal periods within the next five to seven years. These easements, associated with Facilities H-2, H-5, and H-10, were originally granted with 40-year terms and will require renewal to ensure continued reservoir operations. The underlying landowners—two private landowners and one state agency—have not indicated any unwillingness to renew, and the flowage easements contain renewal provisions that require good-faith negotiation of renewal terms. However, renewal terms (including rent adjustments) are not fixed, and there is inherent uncertainty in any renewal negotiation. We recommend that Ironside's post-closing management team begin renewal discussions well in advance of the expiration dates to minimize the risk of disruption.

Access-Road Easement Restrictions. Two access-road easements (associated with Facilities H-3 and H-9) contain provisions that render them terminable upon a change of ownership of the dominant estate without the consent of the grantor. Specifically, these easements provide that the easement "shall terminate automatically upon the sale, transfer, or conveyance of the dominant estate to any party other than the current holder, unless the grantor shall have given prior written consent to such transfer." This language creates a risk that, absent grantor consent, the change in ownership of the Cascadia subsidiaries holding these properties in connection with the Transaction could trigger termination of the easements. We recommend that Ironside's counsel negotiate and obtain the grantors' written consents prior to closing, or, in the alternative, that the EPA include appropriate indemnification and closing condition protections. The loss of access at either facility would require the identification and acquisition of alternative access routes, which could be costly and time-consuming.

E. Encumbrances and Title Exceptions

Our review of the preliminary title reports for the fee-owned hydroelectric parcels identified the following categories of encumbrances and title exceptions:

• Standard Permitted Encumbrances. All parcels are subject to the usual and customary encumbrances that are standard for real property of this nature, including utility easements (electric, telephone, gas, and water), mineral reservations (where the surface estate has been severed from the mineral estate), and county road rights-of-way. These encumbrances are not material to Cascadia's operations and would be classified as "permitted encumbrances" under a standard EPA.

• Scenic Easement — Facility H-3. One facility (Facility H-3, located in Hood River County, Oregon) is subject to a scenic easement held by the Oregon Parks and Recreation Department ("OPRD"). The scenic easement, recorded in 1992, restricts certain visual modifications to structures within 500 feet of the Columbia River corridor, including limitations on building height, exterior materials and colors, and signage. This restriction is manageable from an operational perspective, as Cascadia's current structures comply with the easement terms and no modifications to these structures are anticipated. However, the scenic easement would need to be considered in connection with any future expansion or redevelopment plans at the H-3 site.

• Historical Title Cloud — Facility H-7. As discussed in Section IV.B above, the H-7 title cloud has been resolved by quiet-title action and is insurable.

• No Material Adverse Encumbrances. No encumbrances or title exceptions have been identified that would constitute material adverse encumbrances or that would impede the continued operation of any hydroelectric facility in the portfolio.

A complete schedule of all title exceptions identified in the preliminary title reports for the hydroelectric parcels is set forth in Appendix G hereto, classified by materiality.

V. Wind Farm Facilities — Real Property Analysis

A. Overview

Cascadia operates six wind farms located in Oregon and Washington, with a combined installed capacity of approximately 480 MW. The wind-farm portfolio represents a significant component of Cascadia's revenue base and growth strategy. The property structure for the wind farms is predominantly land-lease based, reflecting the industry-standard approach of leasing agricultural land from private landowners for wind-energy development while retaining fee ownership of the core infrastructure components (substations, operations buildings, and collector-system infrastructure).

The wind-farm facilities are distributed as follows:

• Oregon: Facilities W-3 (Wasco County), W-4 (Deschutes County), W-5 (Wasco County), and W-6 (Josephine County)

• Washington: Facilities W-1 (Klickitat County) and W-2 (Klickitat County)

B. Ground Leases

Fourteen of Cascadia's 18 active ground leases are associated with the wind-farm operations. These leases are the foundation of the wind-farm portfolio's real property structure and require careful analysis.

Lease Terms and Structure. The 14 wind-farm ground leases were originally negotiated with private landowners—predominantly owners of agricultural land—in connection with the original development of each wind farm. The original lease terms range from 30 to 40 years, with one or two 10-year renewal options available at the lessee's election. The weighted-average remaining initial term across the 14 wind-farm leases is approximately 22 years, and the weighted-average remaining term inclusive of unexercised renewal options is approximately 38 years. These remaining terms are generally sufficient to cover the remaining useful life of the existing wind-turbine installations and, in most cases, to support a repowering event.

Rent Structure. Rent under the wind-farm ground leases is structured as a combination of (i) a fixed annual rent payment per turbine installed on the leased premises and (ii) a percentage-of-revenue payment based on gross revenues generated by the turbines situated on the leased premises. The fixed rent component provides the landowner with a guaranteed minimum payment, while the percentage-of-revenue component aligns the landowner's economic interest with the performance of the wind farm. Annual rent escalation provisions are included in all 14 leases, typically tied to a consumer price index adjustment or a fixed annual escalation rate of 1.5% to 2.5%.

Assignment Provisions. The assignment provisions of the 14 wind-farm ground leases are a critical consideration in the context of the Transaction. Our review reveals the following:

• 12 leases permit assignment to an affiliate or successor in connection with a change of control of the lessee without landlord consent, subject only to landlord notice (typically 30 days' prior written notice). Under the structure of the Transaction, in which the equity of Cascadia (and, by extension, the equity of its subsidiaries) will be acquired, these provisions should permit the Transaction to proceed without triggering an assignment consent requirement, depending on whether the change of control of the parent entity is deemed a "change of control" of the subsidiary lessee under the applicable lease terms. We have reviewed the relevant lease definitions and believe that 12 of the 14 leases define "change of control" narrowly enough that the Transaction should not trigger a consent requirement; however, this analysis is fact-specific and should be confirmed with Oregon and Washington real property counsel.

• 2 leases (associated with Facilities W-1 and W-6) contain broader assignment restrictions that require landlord consent for any assignment to a non-affiliate of the lessee, defined to include any transfer of a controlling interest in the lessee. Under these provisions, the Transaction would likely be deemed an assignment requiring landlord consent. We recommend obtaining landlord consents or waivers for these two leases prior to closing. Cascadia management has indicated that the relationships with both landlords are positive and that management does not anticipate material difficulty in obtaining consent, but this cannot be assured.

Decommissioning Obligations. All 14 wind-farm ground leases impose turbine decommissioning and site-restoration obligations on the lessee at lease termination. These obligations typically require the removal of all above-ground structures (including turbine towers, nacelles, and blades), the removal of foundations to a depth of at least three to four feet below grade, the restoration of access roads, and the reseeding or restoration of the leased premises to a condition suitable for agricultural use.

Cascadia has established decommissioning reserves for 12 of the 14 wind-farm sites. The reserves are funded through periodic contributions and are held in designated accounts. Based on our review of the reserve balances (as of December 31, 2021) and current industry estimates of decommissioning costs, we note that the reserves for two facilities (W-3 and W-4) appear underfunded relative to current cost estimates. Specifically:

• Facility W-3: Current reserve balance of approximately $1.8 million against an estimated decommissioning cost of approximately $3.4 million, reflecting a shortfall of approximately $1.6 million.

• Facility W-4: Current reserve balance of approximately $2.1 million against an estimated decommissioning cost of approximately $4.0 million, reflecting a shortfall of approximately $1.9 million.

While neither facility is near the end of its lease term (and contributions will continue over the remaining term), we recommend that the EPA include a representation from the Selling Shareholders regarding the adequacy of decommissioning reserves and that Ironside monitor reserve funding levels on an annual basis post-closing.

C. Fee-Owned Properties

Cascadia and its subsidiaries hold fee simple title to approximately 25 parcels associated with the wind-farm facilities. These parcels are predominantly used for operations and maintenance buildings, substations, collector-system infrastructure (including underground cable routes and above-ground collector lines), meteorological towers, and other ancillary structures. The fee-owned wind-farm parcels are generally smaller in acreage than the leased parcels and are strategically located to support the operational needs of each wind farm.

Our review of the chains of title for the fee-owned wind-farm parcels reveals that the titles are generally clean, with standard permitted encumbrances only. No material title defects or adverse claims have been identified.

D. Easements and Rights-of-Way

Approximately 49 easement and right-of-way instruments are associated with the wind-farm operations. These instruments serve the following principal purposes:

• Turbine Access Roads. Easements for the construction, maintenance, and use of access roads connecting public roads to individual turbine sites on leased and fee-owned land. These easements are essential for ongoing maintenance and repair operations.

• Underground Collector-Line Corridors. Easements for the burial and maintenance of underground electrical cables connecting individual turbines to the collector-system substation. These easements typically run across multiple parcels and must be carefully coordinated with the ground leases and fee-owned parcels.

• Overhead Transmission Lines. Easements for above-ground transmission lines connecting substations to grid interconnection points. These easements are generally held with local utility companies and are in good standing.

• Meteorological Tower Sites. Easements or licenses for the installation and operation of meteorological towers used for wind-resource assessment and performance monitoring.

• Construction Staging Areas. Temporary easements for construction staging areas used during the original construction of the wind farms. Many of these easements have expired by their terms but remain recorded as encumbrances on the underlying parcels.

Encroachment Issues. Our review has identified encroachment issues at two wind-farm sites, which we consider to be among the more significant actionable findings of this real property review:

Facility W-2 (Klickitat County, Washington). At Facility W-2, three turbine pads encroach approximately 8 to 15 feet beyond the recorded easement boundary as depicted on the original ALTA/NSPS survey prepared at the time of construction (approximately 2014). The encroachment appears to have existed since the original construction of the wind farm and may have resulted from minor surveying errors during the construction process or from post-survey adjustments to turbine placement for engineering or environmental reasons. The underlying landowner has not raised a dispute regarding the encroachment to date, and Cascadia management reports that the landowner is aware of and acquiescent to the encroachment. However, there is no recorded instrument memorializing the landowner's consent or expanding the easement boundary to encompass the actual turbine pad locations. Absent a corrective easement or other recorded instrument, the encroachment creates a cloud on Cascadia's property rights and exposes the operation to the risk that a future landowner (or the current landowner in a changed circumstance) could challenge the encroachment.

Facility W-5 (Wasco County, Oregon). At Facility W-5, a gravel access road encroaches approximately 22 feet into an adjacent parcel owned by a third party who is not a party to any lease or easement agreement with Cascadia. The encroachment was identified through a comparison of the access-road easement description in the recorded easement agreement with the as-built survey of the access road. Cascadia management reports that the adjacent landowner is informally aware of the encroachment and has acquiesced to it, but there is no recorded instrument or written agreement memorializing the landowner's consent. Under Oregon law, informal acquiescence alone may not be sufficient to establish a prescriptive easement or to otherwise protect Cascadia's interest in the encroaching roadway, particularly given the relatively recent construction of the road (which may not have been in place for the full statutory period required for prescriptive rights).

Recommendation. We recommend that corrective easements or boundary-line adjustments be obtained for both the W-2 and W-5 encroachments prior to closing. If corrective easements cannot be obtained prior to closing, the EPA should include specific indemnification coverage for encroachment-related claims at these two sites. The estimated cost of obtaining corrective easements is modest (likely in the range of $15,000 to $40,000 per site for survey, negotiation, and recording), and the risk of leaving the encroachments unresolved substantially exceeds the cost of correction.

Interconnection-Related Easements. Easements with local utility companies for interconnection of the wind-farm collector systems to the utility grid are in good standing at all six wind-farm sites. No issues have been identified with respect to these easements.

E. Zoning and Land-Use Permits

All six wind farms operate under conditional use permits ("CUPs") issued by the respective county planning departments in Oregon and Washington. The CUPs authorize the installation, operation, and maintenance of wind-energy facilities on lands that are generally zoned for agricultural or rural residential use. Our review of the CUP files reveals the following:

• CUP Conditions. The CUPs impose a range of conditions on the wind-farm operations, including setback requirements (specifying minimum distances between turbines and property lines, public roads, and occupied structures), noise limitations (typically expressed as maximum decibel levels at the property boundary or nearest residence), shadow-flicker mitigation requirements, avian-protection measures (including post-construction monitoring programs and adaptive management plans), and visual-impact mitigation measures.

• Compliance Status. Based on our review of the CUP files and Cascadia management's representations, all six wind farms are in compliance with the conditions of their respective CUPs. No pending zoning violations, enforcement actions, or compliance proceedings have been identified.

• Facility W-4 CUP Limitation. The CUP for Facility W-4 (Deschutes County, Oregon) includes a condition limiting the total number of turbines that may be installed at the site to 65. Currently, 63 turbines are installed, leaving capacity for only 2 additional turbines. This condition effectively limits the expansion potential of the W-4 site unless an amendment to the CUP is obtained from the Deschutes County Planning Department. An amendment would likely require a new land-use application, environmental review, and public hearing process. Ironside should factor this limitation into its assessment of the growth potential of the W-4 site.

VI. Water-Treatment Facilities — Real Property Analysis

A. Overview

Cascadia operates three water-treatment concession facilities, all located in Oregon. These facilities operate under long-term concession agreements with municipal counterparties, under which Cascadia has been granted the right and obligation to design, build, operate, and maintain water-treatment infrastructure on behalf of the municipal counterparty. The real property rights associated with these facilities derive from and are generally coterminous with the underlying concession agreements.

The concession-based real property structure differs fundamentally from the fee-ownership and ground-lease structures used for the hydroelectric and wind-farm facilities. Under the concession model, Cascadia does not own or lease the underlying real property in the traditional sense; rather, Cascadia holds a license or access agreement that grants the right to use and occupy designated municipal lands (or, in one case, private lands) for the purpose of constructing, operating, and maintaining the water-treatment facilities. These license and access rights are contractual in nature and are subordinate to the concession agreement—if the concession terminates, the associated property rights terminate as well.

This structural feature means that the security of Cascadia's real property rights at the water-treatment facilities is directly tied to the security and continuity of the underlying concession relationships. Any event that threatens the concession—whether expiration, early termination for cause, termination for convenience by the municipal counterparty, or renegotiation of material terms—also threatens the associated real property rights.

B. Bull Run Filtration Project (Portland Metropolitan Water District)

The Bull Run Filtration Project is the largest and most significant of Cascadia's three water-treatment concession facilities. The facility is located in Clackamas County, Oregon, on land owned by the Portland Metropolitan Water District (the "Water District"). Key details are as follows:

Concession Agreement. The concession agreement for the Bull Run Filtration Project was originally executed in approximately 2018 between the Water District and Cascadia Renewables Water Treatment, Inc. (a wholly-owned subsidiary of CRH). The concession has a 40-year term, with annual revenue of approximately $64 million (based on FY 2021 figures). The concession is one of Cascadia's most valuable contracts and a significant contributor to the overall enterprise value of the company.

Real Property Rights. Cascadia holds a license and access agreement (executed contemporaneously with the concession agreement) granting Cascadia exclusive use of approximately 28 acres of Water District land for the filtration facility, associated buildings, treatment basins, sedimentation ponds, chemical storage areas, and access roads. The license and access agreement is coterminous with the concession term—that is, the real property rights terminate automatically upon the expiration or termination of the concession agreement, without any separate termination notice or action required.

Facility Improvements. Cascadia has invested approximately $210 million in the design, construction, and installation of the filtration facility and associated improvements on the Water District's land. Under the terms of the concession agreement, all improvements made by Cascadia on the Water District's land revert to the Water District at the expiration or termination of the concession, without compensation to Cascadia (other than any compensation specifically provided for in the concession agreement's termination provisions). This structure is typical for public-private partnership concessions but creates a significant concentration of capital at risk in the event of early termination or non-renewal.

Concession Renegotiation Notice. On October 28, 2022, the Portland Metropolitan Water District notified Cascadia of its intent to renegotiate certain terms of the Bull Run concession agreement. The Water District's notice cites changed regulatory requirements under Oregon Senate Bill 1567 (2022), which imposes new water-quality and treatment standards applicable to public water systems in Oregon. The Water District's notice does not constitute a notice of termination or default, but rather a request to renegotiate the scope of services, performance standards, and financial terms of the concession in light of the new regulatory requirements.

Implications for Real Property Rights. The implications of the concession renegotiation for Cascadia's real property rights are uncertain and depend entirely on the outcome of the renegotiation. Several scenarios are possible:

1. Renegotiation with Preservation of Real Property Rights. If the renegotiation results in amendments to the concession agreement that preserve the existing term and the existing license and access agreement, Cascadia's real property rights would remain intact. This is the most favorable scenario from a real property perspective.

2. Renegotiation with Modification of Real Property Rights. If the renegotiation results in modifications to the scope of the concession (e.g., expansion of the facility footprint, changes to the designated premises), the license and access agreement would need to be amended to reflect the new terms. This scenario could affect the acreage, boundaries, or permitted uses under the license and access agreement.

3. Termination of the Concession. In the unlikely event that the renegotiation fails and the Water District exercises any contractual right to terminate the concession (whether for convenience, for cause, or by mutual agreement), Cascadia's real property access rights would terminate simultaneously. The approximately $210 million in facility improvements would revert to the Water District under the terms of the concession agreement, subject to any termination compensation provisions.

Risk Assessment. We assess this as the single most significant real property risk identified in our review. While we do not have reason to believe that the Water District intends to terminate the concession, the mere fact of the renegotiation notice introduces uncertainty. The risk is amplified by the magnitude of the capital invested in the facility improvements and the significance of the Bull Run revenue stream to Cascadia's overall financial performance. We recommend that the EPA include comprehensive representations regarding the status of the concession renegotiation, specific indemnification provisions covering adverse outcomes, and, if feasible, that the closing of the Transaction be conditioned upon a satisfactory resolution of the renegotiation (or at minimum upon the absence of a termination notice). We also recommend that Ironside engage directly with the Water District and Cascadia management to develop a detailed understanding of the renegotiation timeline and likely outcomes.

For a detailed analysis of the Bull Run concession agreement and the renegotiation notice, see the C&H Due Diligence Memorandum: Cascadia Material Contracts Summary (dated August 22, 2022).

C. Other Water-Treatment Facilities

Facility WT-2 (Marion County, Oregon)

Facility WT-2 is located in Marion County, Oregon, and operates under a concession agreement with a Salem-area municipal utility. The concession has a 30-year term with approximately 25 years remaining. Cascadia holds a license and access agreement granting exclusive use of approximately 12 acres of municipal land for the water-treatment facility, associated infrastructure, and access roads. The license and access agreement is coterminous with the concession agreement and contains terms substantially similar to those of the Bull Run license and access agreement.

Our review of the WT-2 concession and associated real property instruments has not identified any material issues. The concession is performing in accordance with its terms, no renegotiation notices have been received, and the municipal counterparty has not raised any concerns regarding the concession or the associated property rights. Property taxes on the WT-2 parcels are current, and no title defects or adverse claims have been identified.

Facility WT-3 (Deschutes County, Oregon)

Facility WT-3 is located in Deschutes County, Oregon, and operates under a concession agreement with a Bend-area municipal utility. The concession has a 25-year term with approximately 20 years remaining. Unlike the other two water-treatment facilities, WT-3 involves a hybrid property structure: Cascadia holds a license and access agreement with the municipal utility for use of municipal water-supply infrastructure, and separately leases approximately 8 acres of private land adjacent to the municipal infrastructure under a ground lease with a private landowner.

The ground lease has a remaining term of approximately 22 years, which generally aligns with the remaining concession term but will require separate renewal coordination if the concession is renewed or extended. The lease and the concession do not contain cross-default or co-termination provisions, meaning that the expiration or termination of one instrument does not automatically trigger the expiration or termination of the other. We recommend that, post-closing, Ironside's management team coordinate the renewal timelines for the WT-3 ground lease and the WT-3 concession agreement to ensure continued alignment.

No other material issues have been identified with respect to the WT-3 facility or its associated real property instruments.

D. Easements and Rights-of-Way

Approximately 15 easement and right-of-way instruments are associated with the three water-treatment facilities. These instruments include:

• Pipeline Easements. Easements for water-intake and distribution pipelines connecting the treatment facilities to municipal water-supply systems and distribution networks.

• Access-Road Easements. Easements for access roads connecting the treatment facilities to public roads.

• Utility Corridor Easements. Easements for electrical power lines, communications cables, and other utilities serving the treatment facilities.

• Effluent Discharge Route Easements. Easements for the routing of treated effluent to designated discharge points in accordance with applicable NPDES permits.

All 15 easement instruments are current and in good standing. No pending disputes, enforcement actions, or challenges have been identified with respect to any of the water-treatment facility easements. The only caveat relates to the Bull Run Filtration Project: if the concession renegotiation results in a modification of the facility's operations or a termination of the concession, the associated easements (which are coterminous with the concession) would be correspondingly affected.

VII. Cross-Cutting Issues and Observations

A. Title Insurance

Preliminary title reports have been obtained for all fee-owned parcels in the Cascadia portfolio. These reports were prepared by Adriatic Casualty Group (the "Title Insurer") and identify the recorded encumbrances, exceptions, and conditions affecting title to each parcel. Our review of the preliminary title reports is incorporated throughout Sections IV, V, and VI above, and a complete schedule of all title exceptions is set forth in Appendix G.

The Title Insurer has indicated its willingness to issue owner's title insurance policies at closing for all fee-owned parcels, subject to (i) standard survey exceptions (which can be removed upon delivery of current ALTA/NSPS surveys), (ii) the specific title matters noted above (including the Facility H-7 historical title cloud and the Facility H-3 scenic easement, neither of which the Title Insurer has deemed necessary to except from coverage), and (iii) payment of applicable premiums.

We recommend that the EPA include a requirement that the Selling Shareholders deliver updated owner's title insurance policies as a closing deliverable, with coverage amounts consistent with the allocated purchase price for each parcel. Title insurance provides a critical layer of protection against undiscovered title defects and should be a standard closing requirement for a transaction of this magnitude.

B. Survey Status

ALTA/NSPS surveys are available for 17 of the 23 major facility sites in the Cascadia portfolio. These surveys were prepared at various dates, generally in connection with the original development or acquisition of each facility. The surveys provide detailed information regarding parcel boundaries, improvements, easements, encroachments, setbacks, and other physical and legal conditions affecting the surveyed parcels.

Six facilities have surveys that are more than five years old:

We recommend that updated ALTA/NSPS surveys be commissioned for all six facilities prior to closing. Updated surveys are particularly important at the wind-farm sites, given that encroachment issues have been identified at other wind-farm facilities in the portfolio and similar encroachments could exist at these unsurveyed sites. Based on preliminary inquiries with surveying firms in the relevant jurisdictions, the estimated budget for updated surveys at all six sites is $180,000 to $250,000, depending on site complexity, access conditions, and the level of detail required.

C. Environmental Overlaps

Real property at five facilities is subject to environmental restrictions that affect the permitted uses of the property. These restrictions include:

• Wetlands Designations. Three hydroelectric facilities include parcels with delineated wetlands subject to Section 404 of the Clean Water Act. The wetlands designations impose restrictions on grading, filling, and construction activities within the delineated areas.

• Endangered-Species Habitat. Two facilities (one hydroelectric and one wind farm) include parcels that overlap with designated critical habitat for species listed under the ESA. The habitat designations impose consultation requirements under Section 7 of the ESA and may restrict certain activities within the designated areas.

• Riparian Buffers. Several hydroelectric facilities are subject to state and local riparian buffer requirements that restrict activities within designated distances of streams, rivers, and other waterbodies.

A detailed analysis of these environmental restrictions and their implications for Cascadia's operations is provided in the C&H Due Diligence Memorandum: Cascadia Environmental Liabilities and Compliance (dated August 29, 2022), which incorporates the findings of Clearwater Environmental Consulting Inc.'s Phase I and Phase II environmental site assessments. For purposes of this real property memorandum, we note that no environmental restrictions have been identified that would prevent the continued operation of any facility in the portfolio as currently conducted. However, the environmental restrictions could limit future expansion, modification, or redevelopment of the affected facilities.

D. Change-of-Control and Assignment Provisions

The Transaction involves a 100% equity acquisition of Cascadia, which will result in a change of control of CRH and all of its operating subsidiaries. Certain real property instruments in the Cascadia portfolio contain change-of-control or assignment provisions that may be triggered by the Transaction. We have summarized these provisions throughout the preceding sections and consolidate them here for ease of reference:

We recommend that all necessary consents be obtained prior to closing, and that the EPA include (i) a closing condition requiring the receipt of all material third-party consents identified above and (ii) a covenant requiring the Selling Shareholders to use commercially reasonable efforts to obtain such consents. If any consent cannot be obtained prior to closing, the EPA should

MEMORANDUM
PRIVILEGED AND CONFIDENTIAL ATTORNEY WORK PRODUCT
To: Marcus J. Calloway, Founder & Chief Investment Officer, Ironside Capital Management LP Renata Obasi, Senior Managing Director, Infrastructure, Ironside Capital Management LP
From: Theresa Kim, Lead Associate, Calderwood & Harkness LLP Owen Fischer, Working Associate, Calderwood & Harkness LLP
Date: August 25, 2022
Re: Due Diligence — Real Property Holdings, Easements, Rights-of-Way, and Land-Use Entitlements of Cascadia Renewables Holdings, Inc. and Subsidiaries
Matter No.: 1023-00001
Reviewed by: Pamela Cross, Responsible Partner, Calderwood & Harkness LLP
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I. Executive Summary
This memorandum summarizes the findings of Calderwood & Harkness LLP ("C&H") from its review of the real property holdings, easements, rights-of-way, and land-use entitlements held by Cascadia Renewables Holdings, Inc. ("Cascadia" or "CRH"), an Oregon corporation headquartered at 1100 SW Sixth Avenue, Suite 1800, Portland, OR 97204, and its operating subsidiaries across the states of Oregon, Washington, and Idaho. This review has been conducted in connection with Ironside Capital Management LP's ("Ironside") proposed $300 million commitment to ICM Cascadia Co-Invest, LP (the "Vehicle"), which will co-invest alongside Meridian Infrastructure Partners Fund IV, LP ("Meridian Fund IV") in the 100% equity acquisition of Cascadia at an aggregate enterprise value of $1,950,000,000 (the "Transaction"). The implied EV/EBITDA multiple is approximately 14.1x, based on Cascadia's fiscal year 2021 adjusted EBITDA of approximately $138 million.
The scope of this memorandum encompasses all real property associated with Cascadia's portfolio of 14 hydroelectric facilities, 6 wind farms, and 3 water-treatment concession facilities. Together, these 23 operating facilities are situated across approximately 87 fee-owned parcels and 18 leased parcels, supported by approximately 142 individual easement and right-of-way instruments. The aggregate fee-owned acreage is approximately 34,200 acres, with an additional approximately 11,500 acres held under ground lease.
Overview of Key Findings. The Cascadia real property portfolio is extensive and generally well-documented. Chains of title are predominantly clean, and the operating subsidiaries hold adequate property rights to support the ongoing operations of all 23 facilities in the portfolio. However, our review has identified several issues that warrant attention prior to or in connection with the closing of the Transaction:
•  Easement Renewals: Three flowage easements associated with hydroelectric reservoir operations are approaching their renewal periods within the next five to seven years. While not immediately actionable, these renewals should be tracked and proactively managed post-closing.
•  Encroachments at Wind-Farm Sites: Two wind-farm sites (designated W-2 in Klickitat County, Washington, and W-5 in Wasco County, Oregon) exhibit minor but material encroachment issues where turbine foundations or access roads extend beyond the boundaries of recorded easements. Corrective easements or boundary-line adjustments should be obtained prior to closing.
•  Interrelationship of Real Property Rights and Municipal Concession Agreements: The three water-treatment concession facilities derive their real property access and use rights from the underlying concession agreements. Most notably, the Bull Run Filtration Project concession with the Portland Metropolitan Water District (with approximately $64 million in annual revenue) is subject to a recent notice of intent to renegotiate, which creates uncertainty regarding the corresponding real property rights. This is the single most significant real property risk identified in this review.
•  Change-of-Control and Assignment Restrictions: A limited number of property instruments—including two access-road easements and two wind-farm ground leases—contain change-of-control or assignment provisions that require grantor or landlord consent. These consents should be obtained prior to closing or addressed through appropriate EPA protections.
•  Survey Status: ALTA/NSPS surveys for six of the 23 major facility sites are more than five years old. Updated surveys are recommended, particularly at the wind-farm sites where encroachment issues have been identified.
Data Sources. This memorandum is based on our review of the following principal data sources: (i) documents produced in the Cascadia data room (Room 4 — Real Property) as of August 20, 2022; (ii) preliminary title reports and title commitment packages from Cascadia's title insurer; (iii) survey summaries and ALTA/NSPS survey plats; (iv) Phase I and Phase II environmental site assessments prepared by Clearwater Environmental Consulting Inc. (cross-referenced for overlap with real property matters); (v) county recorder records in the applicable jurisdictions; (vi) publicly available GIS data; and (vii) Cascadia management's responses to C&H's written diligence questionnaire dated July 15, 2022, and supplemental responses dated August 10, 2022.
Companion Memoranda. Real property environmental liabilities and compliance matters—including analysis of wetland delineations, endangered-species habitat designations, contamination issues, and remediation obligations—are addressed separately in the C&H Due Diligence Memorandum: Cascadia Environmental Liabilities and Compliance (dated August 29, 2022), which incorporates the findings of Clearwater Environmental Consulting Inc.'s Phase I and Phase II assessments. Regulatory permits and licenses associated with the real property, including FERC hydroelectric licenses (under 16 U.S.C. §§ 791a–823d) and state utility permits, are addressed in the C&H Due Diligence Memorandum: Cascadia Regulatory Permits and Licenses (dated August 18, 2022).
II. Methodology and Scope of Review
A. Documents Reviewed
C&H's real property review encompassed the following categories of documents and information sources, all of which were produced in or supplemental to the Cascadia data room (Room 4 — Real Property):
1.  Title Commitment Packages and Preliminary Title Reports. Twenty-three (23) title commitment packages were received from Cascadia's title insurer, Adriatic Casualty Group, covering all fee-owned parcels across the portfolio. Each package included preliminary title reports, copies of recorded title exceptions, and proposed policy terms and premiums.
2.  ALTA/NSPS Land Title Surveys. ALTA/NSPS surveys were available for 17 of the 23 major facility sites. The surveys were prepared by various licensed surveyors in Oregon, Washington, and Idaho and generally comply with the 2021 Minimum Standard Detail Requirements for ALTA/NSPS Land Title Surveys (or the applicable prior standard for older surveys). Six surveys are older than five years, a matter discussed further in Section VII.B below.
3.  Recorded Deeds and Instruments of Conveyance. We reviewed copies of all recorded warranty deeds, special warranty deeds, bargain and sale deeds, and other instruments of conveyance through which the various Cascadia subsidiaries acquired fee title to the parcels in the portfolio. Where gaps in the data room record existed, we cross-referenced preliminary title reports and county recorder indices.
4.  Easement Agreements, Licenses, and Rights-of-Way Grants. We reviewed approximately 142 individual easement agreements, license agreements, and rights-of-way grants associated with the Cascadia facilities. These instruments encompass a wide range of purposes, including water conveyance, flowage rights, transmission-line corridors, access roads, pipeline corridors, underground collector-line corridors, meteorological tower sites, and construction staging areas.
5.  Ground Leases and Land-Lease Agreements. We reviewed all 18 active ground lease and land-lease agreements under which Cascadia subsidiaries hold possessory interests in real property. Fourteen of these leases are associated with wind-farm operations on private agricultural land; the remaining four are associated with hydroelectric and water-treatment operations.
6.  Concession Agreements and Related Real Property Access Provisions. We reviewed the real property access, use, and improvement provisions of the three water-treatment concession agreements, including the Bull Run Filtration Project concession with the Portland Metropolitan Water District. Detailed analysis of the concession agreements as material contracts is provided in the C&H Due Diligence Memorandum: Cascadia Material Contracts Summary (dated August 22, 2022).
7.  County and Municipal Zoning and Land-Use Permits. We reviewed zoning certifications, zoning maps, and land-use permit files for all 23 facility sites, including conditional use permits, special-use permits, and development approvals.
8.  Federal Land-Use Authorizations and FERC-Related Property Rights. We reviewed four Bureau of Land Management ("BLM") and United States Forest Service ("USFS") special-use permits and two federal rights-of-way grants, each associated with hydroelectric facilities that are partially situated on federal lands. We also reviewed the FERC-related property rights provisions in the applicable FERC hydroelectric licenses. The pending FERC Section 203 transfer application (FERC Docket Number EC22-143-000, filed October 19, 2022) is addressed in the regulatory permits memorandum.
9.  State and Federal Dam-Safety Inspection Reports. Where relevant to the condition of real property, we cross-referenced state and federal dam-safety inspection reports for the hydroelectric facilities.
10.  Environmental Site Assessments. Phase I and Phase II environmental site assessments prepared by Clearwater Environmental Consulting Inc. were cross-referenced for matters relevant to the real property analysis, including identification of recognized environmental conditions, wetland delineations, and regulatory use restrictions.
B. Jurisdictions Covered
The Cascadia real property portfolio spans three states and multiple counties within each state. Our analysis has been conducted with reference to the real property laws of each applicable jurisdiction. The specific counties covered are as follows:
•  Oregon (primary jurisdiction): Multnomah County, Clackamas County, Hood River County, Wasco County, Deschutes County, Klamath County, Josephine County, and Marion County. Oregon is the domicile state for CRH and the jurisdiction in which the majority of the portfolio's real property is situated.
•  Washington: Klickitat County, Skamania County, and Benton County. Washington properties are associated with both hydroelectric and wind-farm operations.
•  Idaho: Ada County, Canyon County, and Twin Falls County. Idaho properties are associated exclusively with hydroelectric operations.
C. Limitations and Qualifications
The following limitations and qualifications apply to this memorandum and should be borne in mind when evaluating our findings:
1.  Data Room Cut-Off. This review is based on documents produced in the Cascadia data room as of August 20, 2022. Documents produced after that date have not been incorporated into this analysis unless specifically noted. We understand that the data room remains open and that additional documents may be produced.
2.  No Independent Title Searches. C&H has not conducted independent title searches in any county recorder's office. Our title analysis is based on the preliminary title reports and title commitment packages provided by Cascadia's title insurer, supplemented by our review of recorded instruments produced in the data room. While we believe these sources are generally reliable, independent title searches would provide an additional layer of verification.
3.  Survey Limitations. As noted above, ALTA/NSPS surveys for six facilities are more than five years old. Conditions on the ground may have changed since these surveys were prepared. We recommend that updated surveys be commissioned prior to closing, particularly at the wind-farm sites where encroachment issues have been identified at other facilities in the portfolio.
4.  Jurisdictional Scope. Our state-by-state legal analysis is limited to the real property laws of Oregon, Washington, and Idaho. To the extent that federal law (including FERC regulations, BLM and USFS regulations, and federal environmental law) intersects with real property matters, we have noted the relevant issues but have deferred detailed federal regulatory analysis to the companion memoranda identified in Section I above.
5.  No Appraisals. We have not reviewed appraisals of any real property in the portfolio, and valuation matters are outside the scope of this memorandum. Ironside's independent valuation advisors should conduct such analysis as they deem appropriate.
6.  Reliance on Management Representations. In certain instances, we have relied on representations made by Cascadia management in response to C&H's diligence questionnaire. Where management representations address factual matters that we have been unable to independently verify (such as the informal acquiescence by a neighboring landowner to an encroachment), we have noted the limitation.
III. Summary of Real Property Portfolio
A. Overview and Classification
The Cascadia real property portfolio can be classified into four principal categories: (i) fee-owned properties, (ii) leased properties, (iii) government-granted property rights, and (iv) concession-related property rights. The following subsections provide an overview of each category.
1. Fee-Owned Properties
Cascadia and its operating subsidiaries hold fee simple title to approximately 87 parcels across the three states. These parcels have an aggregate acreage of approximately 34,200 acres, the vast majority of which is associated with hydroelectric and wind-farm operations. Fee ownership provides Cascadia with the strongest form of tenure security and, in most cases, reduces the risk of third-party interference with facility operations. The fee-owned parcels include dam sites, reservoir lands, powerhouse sites, switchyards, operations and maintenance buildings, substations, collector-system infrastructure, and certain wind-turbine sites.
Title to the fee-owned parcels is vested in various Cascadia subsidiaries, consistent with the organizational structure of the Cascadia group. The specific vesting entities for each parcel are identified in Appendix A hereto and are cross-referenced to the organizational chart set forth in the C&H Due Diligence Memorandum: Cascadia Corporate Structure and Subsidiaries (dated August 8, 2022). As is typical for infrastructure holding companies of this scale, Cascadia has organized its subsidiaries on a facility-by-facility or regional basis, with each operating subsidiary holding the real property associated with its respective facilities.
2. Leased Properties
Cascadia holds possessory interests in an additional approximately 11,500 acres under 18 active ground lease and land-lease agreements. Fourteen of these leases are associated with wind-farm operations on private agricultural land, reflecting the predominant industry practice of leasing rather than purchasing agricultural land for wind-energy development. The remaining four leases are associated with hydroelectric and water-treatment operations.
The weighted-average remaining lease term across the 18 active leases is approximately 24 years, with renewal options that, if exercised, would extend the effective lease term to approximately 40 to 50 years. The availability and terms of these renewal options vary by lease and are discussed in greater detail in Section V.B below and in Appendix B hereto. The long remaining terms and available renewal options generally provide adequate security of tenure for the economic life of the facilities.
3. Government-Granted Rights
A subset of Cascadia's real property rights is derived from authorizations granted by federal and state governmental agencies. These include:
•  Federal Land Authorizations (BLM and USFS). Four special-use permits and two rights-of-way grants issued by the BLM and the USFS, each associated with hydroelectric facilities that are partially situated on federal lands. These authorizations have terms that are generally coterminous with the corresponding FERC hydroelectric license terms (typically 30 to 50 years) and are subject to periodic review and compliance with federal environmental requirements.
•  State-Granted Easements and Licenses. Seven instruments from Oregon and Washington state agencies granting Cascadia subsidiaries easements, licenses, or other property rights on state-owned lands. These instruments are associated with transmission corridors, access roads, and other infrastructure supporting hydroelectric operations.
•  Municipal and County Licenses. Various access and utility licenses granted by municipal and county authorities in connection with Cascadia's operations. These are generally short-term and revocable instruments that provide supplemental access or utility rights.
Transfer of the federal special-use permits and rights-of-way grants requires the consent of the issuing agency. Historically, such consent has been granted in connection with FERC Section 203 transfer approvals, and we do not anticipate material difficulty in obtaining consent in connection with the Transaction. However, the timeline for federal agency consent may extend beyond the anticipated closing date, and appropriate provisions should be included in the equity purchase agreement (the "EPA") to address this contingency.
4. Concession-Related Property Rights
Cascadia's three water-treatment concession facilities operate under long-term concession agreements with municipal counterparties. The real property access, use, and improvement rights associated with these facilities are derived from and are generally coterminous with the concession agreements. This structure means that the real property rights are inextricably linked to the continuation of the concession relationships—if a concession agreement expires, is terminated, or is materially modified, the corresponding real property rights would be similarly affected.
The most significant of these concession-related property rights is the license and access agreement associated with the Bull Run Filtration Project concession with the Portland Metropolitan Water District. This concession, originally executed in approximately 2018, has a 40-year term and generates annual revenue of approximately $64 million. Cascadia holds a license and access agreement granting exclusive use of approximately 28 acres of Water District land for the filtration facility, associated buildings, treatment basins, and access roads. As discussed in detail in Section VI.B below, the Portland Metropolitan Water District has notified Cascadia of its intent to renegotiate this concession, creating uncertainty regarding the corresponding real property rights.
B. Property Portfolio by Asset Type
The following table summarizes the real property portfolio by facility type, indicating the number of facilities, fee-owned parcels, leased parcels, easements and rights-of-way, and states in which facilities are located:
The hydroelectric segment represents the largest component of the portfolio by both parcel count and acreage, reflecting the inherently land-intensive nature of hydroelectric operations (including dam sites, reservoirs, flowage areas, and transmission corridors). The wind-farm segment, while having fewer fee-owned parcels, accounts for the majority of leased acreage due to the predominance of the land-lease model for wind-energy development. The water-treatment segment is the smallest component by real property footprint but is significant in revenue contribution, particularly the Bull Run Filtration Project.
A complete schedule of all fee-owned parcels, leased parcels, and easements and rights-of-way is provided in Appendices A through C, respectively.
IV. Hydroelectric Facilities — Real Property Analysis
A. Overview
Cascadia's 14 hydroelectric facilities are located across Oregon, Washington, and Idaho, with operational capacities ranging from approximately 5 MW to 120 MW per facility. The combined installed capacity of the hydroelectric portfolio is approximately 620 MW. The real property holdings associated with these facilities include dam sites, reservoirs and associated flowage areas, penstocks, powerhouses, switchyards, transmission line corridors, access roads, and ancillary operations and maintenance facilities.
There is significant overlap between the real property rights associated with the hydroelectric facilities and the boundaries of the FERC hydroelectric licenses under which these facilities operate. FERC licenses typically define a "project boundary" that encompasses all lands necessary for the operation and maintenance of the licensed project. The real property instruments reviewed in this memorandum provide the underlying legal basis for Cascadia's use and occupancy of lands within these project boundaries. The FERC licenses themselves are analyzed separately in the C&H Due Diligence Memorandum: Cascadia Regulatory Permits and Licenses (dated August 18, 2022), including the pending FERC Section 203 transfer application (FERC Docket Number EC22-143-000, filed October 19, 2022).
B. Fee-Owned Properties
Cascadia and its subsidiaries hold fee simple title to approximately 52 parcels associated with the hydroelectric facilities. These parcels encompass the critical operational components of each facility, including dam sites, powerhouse sites, switchyard sites, and portions of reservoir lands. The concentration of fee ownership at these critical infrastructure sites provides strong security of tenure and minimizes the risk that third-party actions could disrupt facility operations.
Our review of the chains of title for the fee-owned hydroelectric parcels reveals that the titles are generally clean and well-documented. Many of the parcels were acquired decades ago—in some cases during the original development of the hydroelectric facilities—and the historical chain of conveyances is typically straightforward and well-recorded in the applicable county recorder's offices.
We note one exception: Facility H-7, located in Klamath County, Oregon, shows a historical cloud on title related to a 1978 boundary dispute between Cascadia's predecessor-in-interest and an adjacent landowner. The dispute concerned the precise location of the boundary between the facility parcel and an adjacent timber parcel, with the adjacent landowner claiming approximately 3.2 acres within the H-7 parcel boundaries. This dispute was resolved by a quiet-title action in 1983 (Case No. 83-CV-0247, Circuit Court of Klamath County, Oregon), in which the court entered judgment in favor of Cascadia's predecessor confirming the boundary as depicted on the original survey. Cascadia's title insurer, Adriatic Casualty Group, has confirmed its willingness to insure over this matter without exception in the proposed owner's policy, based on the final judgment in the quiet-title action and the absence of any subsequent challenge. We are satisfied that this historical matter does not present a material risk to Ironside's investment.
C. Federal Land Authorizations
Four of Cascadia's 14 hydroelectric facilities are partially situated on federal lands administered by the BLM or the USFS. For these facilities, Cascadia's right to use and occupy the federal lands is established through special-use permits and rights-of-way grants issued by the applicable federal agency. Our review of these instruments reveals the following:
•  Special-Use Permits (4 instruments). Each of the four special-use permits authorizes Cascadia (through the applicable subsidiary) to use designated federal lands for hydroelectric facility purposes, including the maintenance and operation of dams, penstocks, transmission lines, and access roads. The permits have terms that are coterminous with the corresponding FERC hydroelectric license terms, which generally range from 30 to 50 years. The permits are subject to periodic review (typically on a five-year cycle) and require ongoing compliance with federal environmental requirements, including the National Environmental Policy Act ("NEPA") and the Endangered Species Act ("ESA").
•  Rights-of-Way Grants (2 instruments). Two rights-of-way grants authorize transmission-line corridors across federal lands connecting hydroelectric facilities to grid interconnection points. These grants are also coterminous with the applicable FERC license terms and are subject to similar environmental compliance requirements.
•  Transfer Requirements. All six federal land authorizations require the consent of the issuing agency for transfer to a new holder. In practice, the BLM and USFS have historically granted such consent in connection with FERC Section 203 transfer approvals, as the agencies coordinate their review processes with FERC. We recommend that applications for agency consent be filed promptly following the execution of the EPA and that the EPA include appropriate provisions to address the possibility that agency consent may not be obtained prior to the anticipated closing date. Cascadia management has confirmed that it has had preliminary discussions with the BLM and USFS regarding the anticipated transfer and that no objections have been raised.
D. Easements and Rights-of-Way
Approximately 78 easement and right-of-way instruments are associated with the hydroelectric operations. These instruments serve range purposes critical to the operation and maintenance of the facilities, including:
•  Water Conveyance Easements. Easements for the conveyance of water through canals, flumes, and pipelines connecting water sources to penstocks and powerhouses. These easements are foundational to the operation of several run-of-river and diversion-type hydroelectric facilities.
•  Flowage Easements. Easements permitting the inundation of lands adjacent to dam sites for reservoir operations. Flowage easements are critical for the operation of all 14 reservoirs in the portfolio. Our review confirms that flowage easements are in place for all 14 reservoirs, providing Cascadia with the legal right to maintain water levels at the designed elevations.
•  Transmission-Line Easements. Twelve transmission-line easements connect facilities to grid interconnection points. All twelve are current and in good standing, with no pending disputes or challenges identified.
•  Access-Road Easements. Nine easements over private land provide access to hydroelectric facility sites. Access-road easements are particularly important for facilities located in remote or mountainous terrain where public road access is limited.
•  Pipeline Corridor Easements. Easements for underground and above-ground pipeline corridors associated with water conveyance and penstock infrastructure.
Flowage Easement Renewals. We note that three flowage easements are approaching their renewal periods within the next five to seven years. These easements, associated with Facilities H-2, H-5, and H-10, were originally granted with 40-year terms and will require renewal to ensure continued reservoir operations. The underlying landowners—two private landowners and one state agency—have not indicated any unwillingness to renew, and the flowage easements contain renewal provisions that require good-faith negotiation of renewal terms. However, renewal terms (including rent adjustments) are not fixed, and there is inherent uncertainty in any renewal negotiation. We recommend that Ironside's post-closing management team begin renewal discussions well in advance of the expiration dates to minimize the risk of disruption.
Access-Road Easement Restrictions. Two access-road easements (associated with Facilities H-3 and H-9) contain provisions that render them terminable upon a change of ownership of the dominant estate without the consent of the grantor. Specifically, these easements provide that the easement "shall terminate automatically upon the sale, transfer, or conveyance of the dominant estate to any party other than the current holder, unless the grantor shall have given prior written consent to such transfer." This language creates a risk that, absent grantor consent, the change in ownership of the Cascadia subsidiaries holding these properties in connection with the Transaction could trigger termination of the easements. We recommend that Ironside's counsel negotiate and obtain the grantors' written consents prior to closing, or, in the alternative, that the EPA include appropriate indemnification and closing condition protections. The loss of access at either facility would require the identification and acquisition of alternative access routes, which could be costly and time-consuming.
E. Encumbrances and Title Exceptions
Our review of the preliminary title reports for the fee-owned hydroelectric parcels identified the following categories of encumbrances and title exceptions:
•  Standard Permitted Encumbrances. All parcels are subject to the usual and customary encumbrances that are standard for real property of this nature, including utility easements (electric, telephone, gas, and water), mineral reservations (where the surface estate has been severed from the mineral estate), and county road rights-of-way. These encumbrances are not material to Cascadia's operations and would be classified as "permitted encumbrances" under a standard EPA.
•  Scenic Easement — Facility H-3. One facility (Facility H-3, located in Hood River County, Oregon) is subject to a scenic easement held by the Oregon Parks and Recreation Department ("OPRD"). The scenic easement, recorded in 1992, restricts certain visual modifications to structures within 500 feet of the Columbia River corridor, including limitations on building height, exterior materials and colors, and signage. This restriction is manageable from an operational perspective, as Cascadia's current structures comply with the easement terms and no modifications to these structures are anticipated. However, the scenic easement would need to be considered in connection with any future expansion or redevelopment plans at the H-3 site.
•  Historical Title Cloud — Facility H-7. As discussed in Section IV.B above, the H-7 title cloud has been resolved by quiet-title action and is insurable.
•  No Material Adverse Encumbrances. No encumbrances or title exceptions have been identified that would constitute material adverse encumbrances or that would impede the continued operation of any hydroelectric facility in the portfolio.
A complete schedule of all title exceptions identified in the preliminary title reports for the hydroelectric parcels is set forth in Appendix G hereto, classified by materiality.
V. Wind Farm Facilities — Real Property Analysis
A. Overview
Cascadia operates six wind farms located in Oregon and Washington, with a combined installed capacity of approximately 480 MW. The wind-farm portfolio represents a significant component of Cascadia's revenue base and growth strategy. The property structure for the wind farms is predominantly land-lease based, reflecting the industry-standard approach of leasing agricultural land from private landowners for wind-energy development while retaining fee ownership of the core infrastructure components (substations, operations buildings, and collector-system infrastructure).
The wind-farm facilities are distributed as follows:
•  Oregon: Facilities W-3 (Wasco County), W-4 (Deschutes County), W-5 (Wasco County), and W-6 (Josephine County)
•  Washington: Facilities W-1 (Klickitat County) and W-2 (Klickitat County)
B. Ground Leases
Fourteen of Cascadia's 18 active ground leases are associated with the wind-farm operations. These leases are the foundation of the wind-farm portfolio's real property structure and require careful analysis.
Lease Terms and Structure. The 14 wind-farm ground leases were originally negotiated with private landowners—predominantly owners of agricultural land—in connection with the original development of each wind farm. The original lease terms range from 30 to 40 years, with one or two 10-year renewal options available at the lessee's election. The weighted-average remaining initial term across the 14 wind-farm leases is approximately 22 years, and the weighted-average remaining term inclusive of unexercised renewal options is approximately 38 years. These remaining terms are generally sufficient to cover the remaining useful life of the existing wind-turbine installations and, in most cases, to support a repowering event.
Rent Structure. Rent under the wind-farm ground leases is structured as a combination of (i) a fixed annual rent payment per turbine installed on the leased premises and (ii) a percentage-of-revenue payment based on gross revenues generated by the turbines situated on the leased premises. The fixed rent component provides the landowner with a guaranteed minimum payment, while the percentage-of-revenue component aligns the landowner's economic interest with the performance of the wind farm. Annual rent escalation provisions are included in all 14 leases, typically tied to a consumer price index adjustment or a fixed annual escalation rate of 1.5% to 2.5%.
Assignment Provisions. The assignment provisions of the 14 wind-farm ground leases are a critical consideration in the context of the Transaction. Our review reveals the following:
•  12 leases permit assignment to an affiliate or successor in connection with a change of control of the lessee without landlord consent, subject only to landlord notice (typically 30 days' prior written notice). Under the structure of the Transaction, in which the equity of Cascadia (and, by extension, the equity of its subsidiaries) will be acquired, these provisions should permit the Transaction to proceed without triggering an assignment consent requirement, depending on whether the change of control of the parent entity is deemed a "change of control" of the subsidiary lessee under the applicable lease terms. We have reviewed the relevant lease definitions and believe that 12 of the 14 leases define "change of control" narrowly enough that the Transaction should not trigger a consent requirement; however, this analysis is fact-specific and should be confirmed with Oregon and Washington real property counsel.
•  2 leases (associated with Facilities W-1 and W-6) contain broader assignment restrictions that require landlord consent for any assignment to a non-affiliate of the lessee, defined to include any transfer of a controlling interest in the lessee. Under these provisions, the Transaction would likely be deemed an assignment requiring landlord consent. We recommend obtaining landlord consents or waivers for these two leases prior to closing. Cascadia management has indicated that the relationships with both landlords are positive and that management does not anticipate material difficulty in obtaining consent, but this cannot be assured.
Decommissioning Obligations. All 14 wind-farm ground leases impose turbine decommissioning and site-restoration obligations on the lessee at lease termination. These obligations typically require the removal of all above-ground structures (including turbine towers, nacelles, and blades), the removal of foundations to a depth of at least three to four feet below grade, the restoration of access roads, and the reseeding or restoration of the leased premises to a condition suitable for agricultural use.
Cascadia has established decommissioning reserves for 12 of the 14 wind-farm sites. The reserves are funded through periodic contributions and are held in designated accounts. Based on our review of the reserve balances (as of December 31, 2021) and current industry estimates of decommissioning costs, we note that the reserves for two facilities (W-3 and W-4) appear underfunded relative to current cost estimates. Specifically:
•  Facility W-3: Current reserve balance of approximately $1.8 million against an estimated decommissioning cost of approximately $3.4 million, reflecting a shortfall of approximately $1.6 million.
•  Facility W-4: Current reserve balance of approximately $2.1 million against an estimated decommissioning cost of approximately $4.0 million, reflecting a shortfall of approximately $1.9 million.
While neither facility is near the end of its lease term (and contributions will continue over the remaining term), we recommend that the EPA include a representation from the Selling Shareholders regarding the adequacy of decommissioning reserves and that Ironside monitor reserve funding levels on an annual basis post-closing.
C. Fee-Owned Properties
Cascadia and its subsidiaries hold fee simple title to approximately 25 parcels associated with the wind-farm facilities. These parcels are predominantly used for operations and maintenance buildings, substations, collector-system infrastructure (including underground cable routes and above-ground collector lines), meteorological towers, and other ancillary structures. The fee-owned wind-farm parcels are generally smaller in acreage than the leased parcels and are strategically located to support the operational needs of each wind farm.
Our review of the chains of title for the fee-owned wind-farm parcels reveals that the titles are generally clean, with standard permitted encumbrances only. No material title defects or adverse claims have been identified.
D. Easements and Rights-of-Way
Approximately 49 easement and right-of-way instruments are associated with the wind-farm operations. These instruments serve the following principal purposes:
•  Turbine Access Roads. Easements for the construction, maintenance, and use of access roads connecting public roads to individual turbine sites on leased and fee-owned land. These easements are essential for ongoing maintenance and repair operations.
•  Underground Collector-Line Corridors. Easements for the burial and maintenance of underground electrical cables connecting individual turbines to the collector-system substation. These easements typically run across multiple parcels and must be carefully coordinated with the ground leases and fee-owned parcels.
•  Overhead Transmission Lines. Easements for above-ground transmission lines connecting substations to grid interconnection points. These easements are generally held with local utility companies and are in good standing.
•  Meteorological Tower Sites. Easements or licenses for the installation and operation of meteorological towers used for wind-resource assessment and performance monitoring.
•  Construction Staging Areas. Temporary easements for construction staging areas used during the original construction of the wind farms. Many of these easements have expired by their terms but remain recorded as encumbrances on the underlying parcels.
Encroachment Issues. Our review has identified encroachment issues at two wind-farm sites, which we consider to be among the more significant actionable findings of this real property review:
Facility W-2 (Klickitat County, Washington). At Facility W-2, three turbine pads encroach approximately 8 to 15 feet beyond the recorded easement boundary as depicted on the original ALTA/NSPS survey prepared at the time of construction (approximately 2014). The encroachment appears to have existed since the original construction of the wind farm and may have resulted from minor surveying errors during the construction process or from post-survey adjustments to turbine placement for engineering or environmental reasons. The underlying landowner has not raised a dispute regarding the encroachment to date, and Cascadia management reports that the landowner is aware of and acquiescent to the encroachment. However, there is no recorded instrument memorializing the landowner's consent or expanding the easement boundary to encompass the actual turbine pad locations. Absent a corrective easement or other recorded instrument, the encroachment creates a cloud on Cascadia's property rights and exposes the operation to the risk that a future landowner (or the current landowner in a changed circumstance) could challenge the encroachment.
Facility W-5 (Wasco County, Oregon). At Facility W-5, a gravel access road encroaches approximately 22 feet into an adjacent parcel owned by a third party who is not a party to any lease or easement agreement with Cascadia. The encroachment was identified through a comparison of the access-road easement description in the recorded easement agreement with the as-built survey of the access road. Cascadia management reports that the adjacent landowner is informally aware of the encroachment and has acquiesced to it, but there is no recorded instrument or written agreement memorializing the landowner's consent. Under Oregon law, informal acquiescence alone may not be sufficient to establish a prescriptive easement or to otherwise protect Cascadia's interest in the encroaching roadway, particularly given the relatively recent construction of the road (which may not have been in place for the full statutory period required for prescriptive rights).
Recommendation. We recommend that corrective easements or boundary-line adjustments be obtained for both the W-2 and W-5 encroachments prior to closing. If corrective easements cannot be obtained prior to closing, the EPA should include specific indemnification coverage for encroachment-related claims at these two sites. The estimated cost of obtaining corrective easements is modest (likely in the range of $15,000 to $40,000 per site for survey, negotiation, and recording), and the risk of leaving the encroachments unresolved substantially exceeds the cost of correction.
Interconnection-Related Easements. Easements with local utility companies for interconnection of the wind-farm collector systems to the utility grid are in good standing at all six wind-farm sites. No issues have been identified with respect to these easements.
E. Zoning and Land-Use Permits
All six wind farms operate under conditional use permits ("CUPs") issued by the respective county planning departments in Oregon and Washington. The CUPs authorize the installation, operation, and maintenance of wind-energy facilities on lands that are generally zoned for agricultural or rural residential use. Our review of the CUP files reveals the following:
•  CUP Conditions. The CUPs impose a range of conditions on the wind-farm operations, including setback requirements (specifying minimum distances between turbines and property lines, public roads, and occupied structures), noise limitations (typically expressed as maximum decibel levels at the property boundary or nearest residence), shadow-flicker mitigation requirements, avian-protection measures (including post-construction monitoring programs and adaptive management plans), and visual-impact mitigation measures.
•  Compliance Status. Based on our review of the CUP files and Cascadia management's representations, all six wind farms are in compliance with the conditions of their respective CUPs. No pending zoning violations, enforcement actions, or compliance proceedings have been identified.
•  Facility W-4 CUP Limitation. The CUP for Facility W-4 (Deschutes County, Oregon) includes a condition limiting the total number of turbines that may be installed at the site to 65. Currently, 63 turbines are installed, leaving capacity for only 2 additional turbines. This condition effectively limits the expansion potential of the W-4 site unless an amendment to the CUP is obtained from the Deschutes County Planning Department. An amendment would likely require a new land-use application, environmental review, and public hearing process. Ironside should factor this limitation into its assessment of the growth potential of the W-4 site.
VI. Water-Treatment Facilities — Real Property Analysis
A. Overview
Cascadia operates three water-treatment concession facilities, all located in Oregon. These facilities operate under long-term concession agreements with municipal counterparties, under which Cascadia has been granted the right and obligation to design, build, operate, and maintain water-treatment infrastructure on behalf of the municipal counterparty. The real property rights associated with these facilities derive from and are generally coterminous with the underlying concession agreements.
The concession-based real property structure differs fundamentally from the fee-ownership and ground-lease structures used for the hydroelectric and wind-farm facilities. Under the concession model, Cascadia does not own or lease the underlying real property in the traditional sense; rather, Cascadia holds a license or access agreement that grants the right to use and occupy designated municipal lands (or, in one case, private lands) for the purpose of constructing, operating, and maintaining the water-treatment facilities. These license and access rights are contractual in nature and are subordinate to the concession agreement—if the concession terminates, the associated property rights terminate as well.
This structural feature means that the security of Cascadia's real property rights at the water-treatment facilities is directly tied to the security and continuity of the underlying concession relationships. Any event that threatens the concession—whether expiration, early termination for cause, termination for convenience by the municipal counterparty, or renegotiation of material terms—also threatens the associated real property rights.
B. Bull Run Filtration Project (Portland Metropolitan Water District)
The Bull Run Filtration Project is the largest and most significant of Cascadia's three water-treatment concession facilities. The facility is located in Clackamas County, Oregon, on land owned by the Portland Metropolitan Water District (the "Water District"). Key details are as follows:
Concession Agreement. The concession agreement for the Bull Run Filtration Project was originally executed in approximately 2018 between the Water District and Cascadia Renewables Water Treatment, Inc. (a wholly-owned subsidiary of CRH). The concession has a 40-year term, with annual revenue of approximately $64 million (based on FY 2021 figures). The concession is one of Cascadia's most valuable contracts and a significant contributor to the overall enterprise value of the company.
Real Property Rights. Cascadia holds a license and access agreement (executed contemporaneously with the concession agreement) granting Cascadia exclusive use of approximately 28 acres of Water District land for the filtration facility, associated buildings, treatment basins, sedimentation ponds, chemical storage areas, and access roads. The license and access agreement is coterminous with the concession term—that is, the real property rights terminate automatically upon the expiration or termination of the concession agreement, without any separate termination notice or action required.
Facility Improvements. Cascadia has invested approximately $210 million in the design, construction, and installation of the filtration facility and associated improvements on the Water District's land. Under the terms of the concession agreement, all improvements made by Cascadia on the Water District's land revert to the Water District at the expiration or termination of the concession, without compensation to Cascadia (other than any compensation specifically provided for in the concession agreement's termination provisions). This structure is typical for public-private partnership concessions but creates a significant concentration of capital at risk in the event of early termination or non-renewal.
Concession Renegotiation Notice. On October 28, 2022, the Portland Metropolitan Water District notified Cascadia of its intent to renegotiate certain terms of the Bull Run concession agreement. The Water District's notice cites changed regulatory requirements under Oregon Senate Bill 1567 (2022), which imposes new water-quality and treatment standards applicable to public water systems in Oregon. The Water District's notice does not constitute a notice of termination or default, but rather a request to renegotiate the scope of services, performance standards, and financial terms of the concession in light of the new regulatory requirements.
Implications for Real Property Rights. The implications of the concession renegotiation for Cascadia's real property rights are uncertain and depend entirely on the outcome of the renegotiation. Several scenarios are possible:
1.  Renegotiation with Preservation of Real Property Rights. If the renegotiation results in amendments to the concession agreement that preserve the existing term and the existing license and access agreement, Cascadia's real property rights would remain intact. This is the most favorable scenario from a real property perspective.
2.  Renegotiation with Modification of Real Property Rights. If the renegotiation results in modifications to the scope of the concession (e.g., expansion of the facility footprint, changes to the designated premises), the license and access agreement would need to be amended to reflect the new terms. This scenario could affect the acreage, boundaries, or permitted uses under the license and access agreement.
3.  Termination of the Concession. In the unlikely event that the renegotiation fails and the Water District exercises any contractual right to terminate the concession (whether for convenience, for cause, or by mutual agreement), Cascadia's real property access rights would terminate simultaneously. The approximately $210 million in facility improvements would revert to the Water District under the terms of the concession agreement, subject to any termination compensation provisions.
Risk Assessment. We assess this as the single most significant real property risk identified in our review. While we do not have reason to believe that the Water District intends to terminate the concession, the mere fact of the renegotiation notice introduces uncertainty. The risk is amplified by the magnitude of the capital invested in the facility improvements and the significance of the Bull Run revenue stream to Cascadia's overall financial performance. We recommend that the EPA include comprehensive representations regarding the status of the concession renegotiation, specific indemnification provisions covering adverse outcomes, and, if feasible, that the closing of the Transaction be conditioned upon a satisfactory resolution of the renegotiation (or at minimum upon the absence of a termination notice). We also recommend that Ironside engage directly with the Water District and Cascadia management to develop a detailed understanding of the renegotiation timeline and likely outcomes.
For a detailed analysis of the Bull Run concession agreement and the renegotiation notice, see the C&H Due Diligence Memorandum: Cascadia Material Contracts Summary (dated August 22, 2022).
C. Other Water-Treatment Facilities
Facility WT-2 (Marion County, Oregon)
Facility WT-2 is located in Marion County, Oregon, and operates under a concession agreement with a Salem-area municipal utility. The concession has a 30-year term with approximately 25 years remaining. Cascadia holds a license and access agreement granting exclusive use of approximately 12 acres of municipal land for the water-treatment facility, associated infrastructure, and access roads. The license and access agreement is coterminous with the concession agreement and contains terms substantially similar to those of the Bull Run license and access agreement.
Our review of the WT-2 concession and associated real property instruments has not identified any material issues. The concession is performing in accordance with its terms, no renegotiation notices have been received, and the municipal counterparty has not raised any concerns regarding the concession or the associated property rights. Property taxes on the WT-2 parcels are current, and no title defects or adverse claims have been identified.
Facility WT-3 (Deschutes County, Oregon)
Facility WT-3 is located in Deschutes County, Oregon, and operates under a concession agreement with a Bend-area municipal utility. The concession has a 25-year term with approximately 20 years remaining. Unlike the other two water-treatment facilities, WT-3 involves a hybrid property structure: Cascadia holds a license and access agreement with the municipal utility for use of municipal water-supply infrastructure, and separately leases approximately 8 acres of private land adjacent to the municipal infrastructure under a ground lease with a private landowner.
The ground lease has a remaining term of approximately 22 years, which generally aligns with the remaining concession term but will require separate renewal coordination if the concession is renewed or extended. The lease and the concession do not contain cross-default or co-termination provisions, meaning that the expiration or termination of one instrument does not automatically trigger the expiration or termination of the other. We recommend that, post-closing, Ironside's management team coordinate the renewal timelines for the WT-3 ground lease and the WT-3 concession agreement to ensure continued alignment.
No other material issues have been identified with respect to the WT-3 facility or its associated real property instruments.
D. Easements and Rights-of-Way
Approximately 15 easement and right-of-way instruments are associated with the three water-treatment facilities. These instruments include:
•  Pipeline Easements. Easements for water-intake and distribution pipelines connecting the treatment facilities to municipal water-supply systems and distribution networks.
•  Access-Road Easements. Easements for access roads connecting the treatment facilities to public roads.
•  Utility Corridor Easements. Easements for electrical power lines, communications cables, and other utilities serving the treatment facilities.
•  Effluent Discharge Route Easements. Easements for the routing of treated effluent to designated discharge points in accordance with applicable NPDES permits.
All 15 easement instruments are current and in good standing. No pending disputes, enforcement actions, or challenges have been identified with respect to any of the water-treatment facility easements. The only caveat relates to the Bull Run Filtration Project: if the concession renegotiation results in a modification of the facility's operations or a termination of the concession, the associated easements (which are coterminous with the concession) would be correspondingly affected.
VII. Cross-Cutting Issues and Observations
A. Title Insurance
Preliminary title reports have been obtained for all fee-owned parcels in the Cascadia portfolio. These reports were prepared by Adriatic Casualty Group (the "Title Insurer") and identify the recorded encumbrances, exceptions, and conditions affecting title to each parcel. Our review of the preliminary title reports is incorporated throughout Sections IV, V, and VI above, and a complete schedule of all title exceptions is set forth in Appendix G.
The Title Insurer has indicated its willingness to issue owner's title insurance policies at closing for all fee-owned parcels, subject to (i) standard survey exceptions (which can be removed upon delivery of current ALTA/NSPS surveys), (ii) the specific title matters noted above (including the Facility H-7 historical title cloud and the Facility H-3 scenic easement, neither of which the Title Insurer has deemed necessary to except from coverage), and (iii) payment of applicable premiums.
We recommend that the EPA include a requirement that the Selling Shareholders deliver updated owner's title insurance policies as a closing deliverable, with coverage amounts consistent with the allocated purchase price for each parcel. Title insurance provides a critical layer of protection against undiscovered title defects and should be a standard closing requirement for a transaction of this magnitude.
B. Survey Status
ALTA/NSPS surveys are available for 17 of the 23 major facility sites in the Cascadia portfolio. These surveys were prepared at various dates, generally in connection with the original development or acquisition of each facility. The surveys provide detailed information regarding parcel boundaries, improvements, easements, encroachments, setbacks, and other physical and legal conditions affecting the surveyed parcels.
Six facilities have surveys that are more than five years old:
We recommend that updated ALTA/NSPS surveys be commissioned for all six facilities prior to closing. Updated surveys are particularly important at the wind-farm sites, given that encroachment issues have been identified at other wind-farm facilities in the portfolio and similar encroachments could exist at these unsurveyed sites. Based on preliminary inquiries with surveying firms in the relevant jurisdictions, the estimated budget for updated surveys at all six sites is $180,000 to $250,000, depending on site complexity, access conditions, and the level of detail required.
C. Environmental Overlaps
Real property at five facilities is subject to environmental restrictions that affect the permitted uses of the property. These restrictions include:
•  Wetlands Designations. Three hydroelectric facilities include parcels with delineated wetlands subject to Section 404 of the Clean Water Act. The wetlands designations impose restrictions on grading, filling, and construction activities within the delineated areas.
•  Endangered-Species Habitat. Two facilities (one hydroelectric and one wind farm) include parcels that overlap with designated critical habitat for species listed under the ESA. The habitat designations impose consultation requirements under Section 7 of the ESA and may restrict certain activities within the designated areas.
•  Riparian Buffers. Several hydroelectric facilities are subject to state and local riparian buffer requirements that restrict activities within designated distances of streams, rivers, and other waterbodies.
A detailed analysis of these environmental restrictions and their implications for Cascadia's operations is provided in the C&H Due Diligence Memorandum: Cascadia Environmental Liabilities and Compliance (dated August 29, 2022), which incorporates the findings of Clearwater Environmental Consulting Inc.'s Phase I and Phase II environmental site assessments. For purposes of this real property memorandum, we note that no environmental restrictions have been identified that would prevent the continued operation of any facility in the portfolio as currently conducted. However, the environmental restrictions could limit future expansion, modification, or redevelopment of the affected facilities.
D. Change-of-Control and Assignment Provisions
The Transaction involves a 100% equity acquisition of Cascadia, which will result in a change of control of CRH and all of its operating subsidiaries. Certain real property instruments in the Cascadia portfolio contain change-of-control or assignment provisions that may be triggered by the Transaction. We have summarized these provisions throughout the preceding sections and consolidate them here for ease of reference:
We recommend that all necessary consents be obtained prior to closing, and that the EPA include (i) a closing condition requiring the receipt of all material third-party consents identified above and (ii) a covenant requiring the Selling Shareholders to use commercially reasonable efforts to obtain such consents. If any consent cannot be obtained prior to closing, the EPA should

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