Face The Facts On Lansdowne: BENN
What evidence could be presented to council that council would be prepared accept? A great question to pose to someone, to determine if they are open-minded enough to hold an adult conversation.
Let’s examine that question in the context of Lansdowne 2.0. An examination of Lansdowne 1.0 is important, if only to develop lessons to apply to Lansdowne 2.0.
To recap Lansdowne 1.0. An unsolicited bid arrives on the city’s doorstep. When you cut through all the rhetoric and spin, the plan was for the city to fund the public infrastructure elements of a redevelopment of Lansdowne Park, of which three developers would oversee the construction (for a fee), while building for their own account an array of private residences, including a high-rise tower, some retail space and some commercial space.
As an incentive, the developers would bring a CFL franchise back to the nation’s capital. There was a complicated waterfall arrangement that would see the developers get their return on investment in priority to the city. The city’s share of the waterfall would be retained by the developers to fund the future maintenance of the public infrastructure. Did I miss any material elements of the business terms? Yes. That’s right, I forgot to mention that the city did a sole source deal, notwithstanding its general policy to seek competitive bids, like they do for pencils and paper.
Over the next decade and change, it turns out that the residential sales were solid and by all accounts, profitable. However, the retail and commercial space has underperformed. Underperformed as in anemic. As for the CFL franchise, aside from two seasons of high-end on-field performance, all the other seasons have been underwhelming on the field and at the box office. As for the waterfall, well it turns out that it was less than a trickle.
A few years ago, the same developers submitted another unsolicited bid. More city infrastructure, to be project managed by the developers – once again for a fee. More residential buildings, because that is where the real profits for the developers are. Oh, and it has to be sole-sourced again.
To demonstrate to the public that the city would not be fooled again, city staff was commissioned to present financial projections that showed this was a great deal for the city. Except, in response to public pressure, the city asked a high-profile, independent consultant to review the financial projections. The response from Ernst & Young was that the financial projections were optimistic. Optimistic is the term that public accountants use when they mean fanciful. Fanciful as in fantasy.
Neither staff nor council paid attention to Ernst & Young’s findings. So, the city auditor general reviewed staff’s financial projections, and also found them to be optimistic. Optimistic as in fanciful. The AG found that the city’s share of the construction costs are expected to be at least 17 per cent higher. That the revenue projections were not based on market realities. That the projected operating costs were far too low. Very simply put, the AG’s findings are even more damaging than the limited-scope report issued by Ernst & Young.
Which brings us back to the question, will council accept the evidence as presented by Ernst & Young and the auditor general and revisit in a mature, adult manner the business terms of Lansdowne 2.0? Or are councillors’ minds collectively closed? Time will tell, but the odds favour Lansdowne 2.0 going forward, in a manner generally consistent with the unsolicited, sole-sourced bid.
Ron Benn, a finance executive, has been a member of the Centrepointe Community Association for the better part of three decades.
For You:
City Looks Up To See Low: BENN
Good People Get Bad Reps At City: THE VOTER
NIGHTMAYOR: Sutcliffe Is Upset, We Are Too
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– The Bulldog – News Feed Enter 
Good to have such a succinct re-accounting, Ron. Thanks!
Two thumbs up, Ron!
I know it might distract from your story but I have a different kind of ‘optimistic’ back casting imagination I’d like to suggest: imagine if, in 2015, we’d had a real mayor, one who was looking to build Ottawa for it’s best future. He called up his OSEG buddies and said ‘Guys, L 1,0 didn’t go so well, the waterfall isn’t even trickling, people aren’t using the space, many of the subcontractors had to go bankrupt. Looking forward to the necessary replacement of the North stands in about 10 years, we’re going to do it differently. I’m going to start an expensive public consultation to find out what Ottawa Citizens want in this gem of a public space. You’ll be welcome to make your input but it will be considered equally along with the public input and staff input.” I know, it’s a fantasy, but what if Ottawa could operate that way, getting people involved in deciding how to spend their money instead of automatically delegating those decisions to the development community?
Jake, it isn’t too late to put into place a scenario similar to what you describe.
Let’s put aside any discussion about whether the findings of E&Y and AG qualifies as new information versus a complete refutation of what staff presented. That should occur at a later stage, perhaps by an objective, third party led review of the process that led to this fiasco. Think of a variant of the provincially appointed LRT commission.
What a not dysfunctional senior board tasked with oversight should do is call for a reset. They should ask themselves, and by extension others, what should a revitalized Lansdowne look like. A ‘state of the possible’ blank sheet.
The key to moving forward on Lansdowne is that councillors take their roles seriously. That they acknowledge that a reset is necessary based on what is clearly a challenge to the nature and quality of information that the initial decisions were made. To re-evaluate the ‘business decisions’ that were made now that they have better quality financial information. That would require leadership. It would require that a majority of the members of council decide to ignore Mayor Sutcliffe’s lame policy of not revisiting past decisions.
However, one must keep in mind that the problem with dreaming is eventually you wake up and the world remains as it was.
“Participation in (municipal politics) is not a gift for which we should beg, It is our right.” George Monbiot
Great article Ron. About the audit, do you think the AG could hold on to her job if she didn’t spin the financial situation as positively as possible and still retain some professional integrity? The debt servicing cost for Lansdowne 2.1 could be funding transit deficits, affordable housing, community centres and the like in underserviced wards. And even filling potholes. A total tragedy for Ottawa taxpayers.
I recall in days of yore that a councillor, I think Peter Hume, proposed an international competition to get the very best ideas as to what could be done with Lansdowne Park. Council approved the process and it was launched. Before it got very far, it was kiboshed by staff. It never came back to Council to have that approved but then everyone’s attention was pulled to the sole-sourced, unsolicited proposal from the gang at OSEG. Look, shiny!
At the time, there was a Council policy that said that unsolicited proposals had to be put out to the public to give others the chance to bring forward their own ideas. This didn’t happen since the mayor of the day jumped on it as if it had been delivered from the heavens by a choir of angels.
We’ll never know what that international competition or any responses to the unsolicited bid would have brought us but we sure know what we got. And we’re getting more of what that was. Kind of makes you wonder what was in it for the mayor of the day and his foot soldiers.
It’s well past time for Doug Ford to come back to Ottawa and announce that he’s appointing a board of trustees to take over Ottawa’s municipal government. I’ve been wondering for some time if the appointment he made not long ago of a “liaison” between the province and the Mayor & Council could be a precursor to the arrival of either a Commissioner or trustees to bring some oversight to the current municipal structure.
When Claude Bennett was appointed to chair the Ottawa Transition Board, the eleven existing municipal governments continued to function but there were certain things they were constrained from doing without passing them by the Transition Board. This was to stop them from hogtying the new City of Ottawa so that it couldn’t run its own ship.
Of course, the new City had its own constraints imposed by the Transition Board, not the least of which was the hiring of all senior management. As I recall that also included an initial budget. David Muir would be able to confirm that.
Ford has the blueprint very tidily set out for him in the structure of the Transition Board and its authority/mandate. It will need some polishing to reflect new realities but it’s a good starting point. I wouldn’t hold out for another Claude Bennett to head it up since he was clearly a political appointee sent to do Mike Harris’ bidding but there are lots of very competent administrators out there who would come without that baggage.
It’s also past time that Lisa MacLeod, now the lone Tory MPP in Ottawa (I think?), came forward and took up the cause. Lisa’s no fool – in fact, far from it. She is well aware of how far off the tracks the City’s gone. People forget that before running for office, she worked at Ottawa City Hall and she knows municipal government and how it’s supposed to work like the back of her hand. She needs to make getting City Hall cleaned up her priority asap.
The recent bankruptcy of the Trainyards adds fuel to the argument that the retail plan is doomed.
Andrew:
I’m not sure that’s the point. Retail doesn’t matter. Residential does.
cheers
kgray