At the current rate of revenue obtained through the Lansdowne waterfall agreement, the City of Ottawa should recoup all of its $211-million investment in the project in 147 years from a private consortium with which it partnered in the redevelopment.
Financial figures obtained from the City of Ottawa by The Bulldog this week show that in the first three years of the waterfall agreement, the municipality received $1.43 million in each of the first three years of the project.
“To date the only revenue accruing to the City is the L1 – Additions to Lifecycle Fund. $1.427M is accruing each year, and so from 2015 to 2017 we would have accrued three year’s worth, or $4.281M,” said Isabelle Jasmin, the deputy city treasurer this week in an email to The Bulldog.
A report from Gordon McNair entitled “Lansdowne: a success story of redevelopment in the heart of Ottawa” showed the City of Ottawa poured $211 million into the project.
Those costs included:
- $167 million for renovating the stadium, arena and the municipality’s share of the parking garage. The city secured air rights over the garage and the retail area;
- $44 million for the construction of a park on the site.
The McNair report praised the agreement between the city and Ottawa Sports and Entertainment Group:
“Significant due diligence was required to complete the Project Agreement between the City and OSEG. It sets out the financial and other fundamental elements of the relationship between the parties for the project and provides a framework for the development-specific agreements, including the stadium and retail leases and multiple reciprocal agreements between the components to achieve synergy as one redeveloped site.”
While the municipality continues to own the land in the historic location, OSEG is leasing the property at a nominal fee for 30 years with two 10-year options. The land prior to the redevelopment was one of the most valuable undeveloped properties in downtown Ottawa.
The $167 million used to refurbish the arena provided homes for sports teams such as the Ottawa Redblacks, Ottawa Fury and the Ottawa 67s. At present Mayor Jim Watson has not been asked for money for a new home for the Ottawa Senators on LeBreton Flats. However Watson has refused to pay half the costs for remediation of polluted land on which the Senators would develop despite the fact that it is city policy to do so when developers build on such brownfields.
Watson justifies this stand by saying that the City of Ottawa should not support professional sports teams despite pouring tens of millions into Lansdowne.
As well, the Lansdowne partnership has put the city in a double-barrelled conflict of interest. First, developers behind OSEG routinely come to the City of Ottawa for project approvals unrelated to the Lansdowne deal. Second, the city, as a partner with OSEG, is in direct competition with the Ottawa Senators in the sports and entertainment business.
So Watson, as the sole negotiator for the City of Ottawa in the LeBreton arena deal, would see added competition for its partnership from the Senators at a downtown location. Accordingly the mayor, the sole negotiator for the city, is dealing with the top competitor of its Lansdowne partnership not just in the marketplace, but also in planning approvals and related issues.
Interestingly in an unrequested piece of information from the city sent to The Bulldog, the $1.47 million in revenue received annually by the municipality does not go directly to the City of Ottawa. In fact, that money goes to a fund used to maintain city properties on the site.
Outside of the Lansdowne agreement, the city has earned about $1.6 million over the past 3.5 years from its properties on the site including the Aberdeen Pavilion and the Horticultural Building, said city facilities general manager Dan Chenier in an unrequested email to The Bulldog. These revenues are outside of the closed Lansdowne deal, according to the city.
The McNair report points out that in the extremely complicated deal, “The city is entitled to share financial returns on the income generation of the retail component through a ‘closed financial system’ beginning in the 30th year and the city is entitled to 50 per cent of the net revenue produced by the retail element.”
With so little revenue being generated for the city in its Lansdowne partnership, it might explain why the municipality and Watson are so hostile to more competition from its chief rival in the sports and entertainment field the Ottawa Senators with a much-improved location at LeBreton Flats over its current Kanata site.
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