Savings Account Would Yield More For City Than Lansdowne

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The City of Ottawa is expected to receive about six per cent of revenue generated at Lansdowne in its partnership with Ottawa Sports and Entertainment Group over the next three decades.

A financial report released on July 4 last year says the projection of revenue from the site for the next 30 years is $508 million. Of that total, the City of Ottawa is expected to receive $33 million.

The municipality poured $211 million into refurbishing the stadium and arena on the site plus building a park. It also leased commercial land at Lansdowne for a nominal fee for 30 years plus two 10-year options.

While it is difficult to estimate how much the commercial land would raise if it were rented at market rates, no doubt the sum is substantial. However the $211 million put in a bank savings account at today’s modest rates would earn $114 million over 30 years not counting compounding while revenue coming from the city’s part of the waterfall over the same period would yield the aforementioned $33 million. A simple investment in a savings account would much more than triple the revenue that the city receives from Lansdowne.

Nevertheless according to the report, Lansdowne has been a great success.

“The original objective of the partnership between the City and OSEG was to revitalize Lansdowne Park. Given the level of activity at Lansdowne and TD Place in the first three years of operation it is safe confidently say that the excitement has returned to Ottawa’s traditional central gathering place. Anyone who attended the Grey Cup parade on Bank Street or in front of the Aberdeen Pavilion last November can attest to that.”

The municipality also touts the estimate that in 30 years the city is expected to receive $1 million more than originally expected.

An earlier report in The Bulldog revealed that the city would make its $211 million back from Lansdowne in about 147 years.

In fact city revenue from Lansdowne goes into a fund to conduct repairs to city properties on the site.

Still city staff is enthusiastic about Lansdowne:

“As Ottawa celebrates Canada’s sesquicentennial year, Lansdowne will be a destination for many visitors to our City. Ottawa has a lot to see and do and OSEG is proud that Lansdowne has so much to offer our visitors. The 2017 Grey Cup and Grey Cup Festival are estimated to bring over 200,000 visitors to Lansdowne and generate $100 Million in economic activity for our City. RNation is looking forward to welcoming the nation to our City.

“In closing, 2016 was a year of continued growth and success at Lansdowne and 2017 is positioned to be even better.”

To read the report, click on the highlighted type below:

2017 Lansdowne Annual Report to Council

 

The snowy Grey Cup held in Ottawa last year.

 

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5 thoughts on “Savings Account Would Yield More For City Than Lansdowne

  1. Imagine if the city had spent even a fraction of that money revitalizing the Byward Market.

    The heritage of the Byward Market makes it unattractive for developers and it’s where public funds can make a significant difference. Condos, retail space and sports stadiums on the most prized piece of undeveloped land in the city are purely commercial and therefore attractive for developers and shouldn’t require public money (if you’re doing right).

    0

    1. K.A.:

      Thank you for this.

      I doubt that private money was available to redevelop the arena and stadium.

      Don’t know why the elaborate trappings of a Lansdowne partnership were necessary for that.

      Instead, ask the public. Do you want to put $160 million in a stadium that will be used by private entities such as the Redblacks, Fury, 67’s and for big entertainment acts?

      Yes or no.

      It’s pretty easy and you don’t have to lend out valuable land for nothing.

      cheers

      kgray

      0

  2. Let’s suppose for a minute that the terms of the contract were reversed and that OSEG would be getting a pittance on its investment?

    How long would it take for them to declare bankruptcy and leave the city holding the bag? I don’t think the city can declare bankruptcy, but is it possible that its lawyers, under anew regime at city hall, could find some way out of this mess?

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    1. Merrill:

      Thank you for this.

      Renegotiate the deal? Were I OSEG, I wouldn’t even dream of it.

      I’d just tell the city to honour the contract.

      And remember, by allowing the city to negotiate the contract again, how much do you want to bet it gets worse for taxpayers. Negotiations don’t appear to be the city’s strength.

      cheers

      kgray

      2+

    2. For the city to want out, it would require Lansdowne to become a political liability, and suddenly you’ll see the mayor and councillors blaming private sector for poor execution of their grand vision.
      Then after enough time passes and it’s no longer as politically charged or faces around council change, the city will pay even more money to get out blaming previous decision-makers. Taxpayers never win.

      1+

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