The Argument Against Lansdowne: SARAVANAMUTTOO

Published 07/22/2025 · Updated 07/21/2025

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What is Lansdowne 2.0 really about?

I have been a critic of the Lansdowne 2.0 proposal since it first went public in 2022. I put a lot of effort into understanding the financial model and the intricacies of the public-private partnership. As a public finance guy, my assessment is that Lansdowne 2.0 is simply a bad deal for taxpayers.

Earlier this week, the Better Ottawa Municipal Panel — myself and former journalists Joanne Chianello and Jon Willing — recorded an extended episode on Lansdowne. That will be coming out in a few days. Rogers TV kindly filmed us on location.

What Chianello and Willing pointed out is that because we can’t really say how Lansdowne will perform, we should stop with the charade that rebuilding the site is something we can do at very little cost to the taxpayer.

Instead, decide if Lansdowne is a priority — if we feel the stadium and arena need to be modernized, or if we are concerned that not funding Lansdowne 2.0 could mean the end of professional football in Ottawa. If it’s a priority, then pay the half-billion dollars and hope that sometime in the future we get as much of that money back as possible.

But if it is not a priority, then we should not invest in Lansdowne 2.0. Drop the pretense that this is almost a freebie for taxpayers, because the financial projections are only one scenario of what might happen.

The financial model is a best guess

When it comes to the Lansdowne financials over the next 40 years, it turns out we know very little.

As an economist, I’ve created a lot of financial models in my day. We create them to determine if a proposal looks reasonable or not. Sometimes we tweak the assumptions so that the model produces the result we want.

Financial models are our best guess of the future, but it’s a complex world out there and we simply cannot model all that complexity. Hopefully our estimates turn out to be in the right ballpark.

So when councillors Cathy Curry, Marty Carr and other of their colleagues talk with such authority about the project, don’t be fooled. They want you to believe that the financials can be reliably predicted, leaving no scope for people to question the model.

But it turns out that there is not much in the Lansdowne financing model that we can reliably predict.

What we do know

With Lansdowne, we know that the project will cost at least $419 million. It might defy the odds and come in on budget. Or, it might end up costing us more, possibly a lot more. We simply don’t know.

We know that the interest payments on Lansdowne debt will amount to $16.4 million a year for 40 years. That’s before any possible cost escalations.

And despite the City of Ottawa’s insistence that Lansdowne will generate enough revenue that taxpayers are only on the hook for $5 million a year, that is simply a hope.

We know that the Ottawa Sports and Entertainment Group will pay $500,000 a year in rent, and that there will be a surcharge on tickets which will likely produce about $700,000 a year.

But $1.2 million in reliable revenues is a long way from $16.4 million.

The the city-OSEG partnership will almost certainly make some money for the city this time around. There will be property taxes from residential towers built on site.

But how much they will be, and when we will see those revenues are important questions. For the first decade or two and possibly longer, we should expect returns to be closer to the $1.2-million figure than the $16.4-million one.

A response to Curry’s statement

A number of people asked me to respond to Curry’s message. Here is her explanation of the proposal.

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I have had a couple of residents reaching out about information they read in the media and on social media about Lansdowne 2.0. The question regarding the finances for Lansdowne asked in both emails encouraged me to create a section on the Kanata North website so that residents can get accurate information. I will continue to add information to this page so that people can get the right information.

Are taxpayers footing the bill for Lansdowne 2.0?

Some media and social media reports refer to the investment of half a billion taxpayer dollars. This statement is not correct. To be clear, the total cost of the redevelopment was estimated to be $419 million. We will get another update this fall from staff given that the bids are coming in. What has been confusing to residents is $273 million of that amount will come from the new revenue from the increased property tax assessment, new revenue from air rights for the new housing and hotel, and additional revenue with the partnership from OSEG. This is not money that can be spent elsewhere because it does not exist unless Lansdowne is redeveloped.

Of the remainder of the costs, some of it comes through money currently held in reserve for capital maintenance of Lansdowne (that the city has to pay regardless as we own 50 per cent of the asset) and some of it is through debt that will be repaid over 40 years – representing a very tiny fraction of city expenditures, and certainly not at a level that would meaningfully affect the City’s ability to spend on transit, housing, or other priorities.

More information about Lansdowne 2.0 can be found at:

Engage Ottawa website: https://engage.ottawa.ca/lansdowne-2-0?tool=qanda#tool_tab

Lansdowne 2.0 website: https://anevenbetterlansdowne.ca/faq/

I will continue to add all available information to this page, and when I hear repeated questions from residents, I will look to address them like I have above.

—

Curry presents Lansdowne financial numbers with great certainty. But let’s look at her numbers more closely and see how little certainty there really is.

Cost of $419 million is unlikely to hold

In November 2023, City staff said Lansdowne 2.0 would cost $419 million. As the project team engages bidders for the project, they have been working overtime to see that bids fit into the budget number.

It means they are cutting back on everything possible. For example, we were promised a green roof. Instead, we are now getting a painted green roof.

Change orders are coming

Pairing back the initial quotes means that as soon as shovels are in the ground, we should expect to see a flurry of “change orders” arrive. Contractors will require a larger budget than originally agreed to, as they contend the city starts asking for “new” features — features that really should have been included all along, but which might have got pruned along the way.

Contingency reserves are too low

All those change orders will initially be financed out of contingency reserves.

The city has set aside 20 per cent of construction costs for contingency.

The municipal auditor general said that, according to the city’s own policy, this should be 30 per cent.

AG says $493 million is the correct cost

This is why the auditor general says the city has underestimated the cost of Lansdowne, that it should be $493 million.

Another $19 million for parking

And then there is parking. The city has decided that the $19 million taxpayers will spend to build 140 new underground parking spots at Lansdowne is NOT included as a project cost.

They say that since the parking spots will be leased to a third party, this cost isn’t relevant to total project costs.

But it is!

The City has estimated the borrowing costs on parking to be $1 million a year, of which the city can only get back $400,000 according to current market leasing rates. The annual shortfall of $600,000 will be paid by the taxpayer, through our parking reserve funds. But that is money that should be spent on parking facilities throughout the city.

$513 million is the starting cost

Taxpayers are on the hook for paying the debt charges on parking, starting from Day 1.

But here is a question that is unclear to me. When does the tenant start leasing those parking spots? Is it Day 1 also? Or is it when the condos get built (see below!) — which might be a decade later. We might not start collecting parking fees for 10 years or more after we build those spots.

It is misleading to say that parking should not be considered as part of the project budget. Of course it is part of the budget. With parking, the cost of Lansdowne 2.0 climbs to $513 million.

“This time is different” are the four most expensive words in history

Mayor Mark Sutcliffe understands that big projects normally go over budget.

“There are delays and cost overruns with every major infrastructure project in the world”

Mark Sutcliffe, Feb. 8, 2025, CBC News

He said in the context of transit. But why would he expect Lansdowne to be any different?

Could this project go over budget significantly? If so, expect Ottawa City Council to be asked in a year or two to increase the Lansdowne budget — like with the new central library — to which staff would say that the city has little choice given how far the project has advanced.

Revenues are unlikely to fully materialize

Now let’s turn to the revenue side.

Curry says the city will get $273 million in new revenue from property taxes, air rights and Partnership profits.

(N.B. the numbers here are the net present value of a stream of receipts over the life of the partnership out to 2066 unless otherwise indicated).

Math not mathing

In fact, that statement is not quite right. It includes the estimates in the city staff report of $74.5 million for property tax revenues and $142.8 million for partnership distributions. It also includes $39 million for property rights, but only subtracts $3.9 million for affordable housing, when council agreed that $9.8 million of the property rights would go to affordable housing.

It also includes $20 million that the city assumes it will get from the federal or provincial government. (Spoiler alert: never going to happen).

So Curry’s $273 million should really be $246 million.

And within that $246 million, there is not a lot that we can rely on.

We can count on revenues from rent and ticket surcharges of $22 million

OSEG will pay the city rent of $500,000 a year. There will be a surcharge on each ticket, that amount to about $700,000 per year. Together, these will produce $22 million for the city (in NPV terms). We can consider this a pretty reliable revenue source.

Increased property tax amounts to $74 million of new revenues, but might not show up for a decade

The Lansdowne proposal involves building two residential towers. Those, and new commercial buildings, will create property-tax revenue of $65 million over the life of the agreement.

But even a casual observer knows that the condo market is in the tanks right now, meaning new condos at Lansdowne might not get built anytime soon. Perhaps the developer will go with purpose-built rentals instead, but that market is softening too.

The developer will be under no use-it-or-lose-it clause. They could sit on these property rights for an extended period of time. If so, we might not see any property-tax revenue for a decade or more.

We’re told to expect a further $9 million from a hotel tax. But if a hotel was put in, that would likely displace some of the residential units and their expected tax revenue.

Selling Lansdowne property rights might net $29 million, although market conditions have likely worsened in the past two years

One of the dirty secrets of Lansdowne is that we are selling off part of the main road in front of the Aberdeen Pavilion. Curry incorrectly calls this “air rights”. That would suggest we are selling the rights to build in the air above a city building.

Instead, we are demolishing the north stands, arena and retail facilities where the Good Life is, and selling surface land there to a property developer as “property rights” with the expectation that a covenant in the sales agreement will allow us to buy it back later. Curry, of all people, should know that covenants can be impossible to enforce, given her experience fighting the redevelopment of a golf course into homes, that a covenant was supposed to keep as greenspace forever.

Putting aside the issue of whether this council should effectively start privatizing public parks, given current market conditions, we just don’t know if the city could still secure the $29 million from property rights for Lansdowne financing ($39 million less $9.8 million allocated for affordable housing).

We are told to expect another $121 million in partnership profits, but history suggests these will fall short

With the existing Lansdowne Partnership, taxpayers were promised about $100 million in returns (future value). We got nothing.

Now we are told we’ll get $121 million (net present value) in profits. Even if these profits were to come true, in contrast to the historical Lansdowne record, two-thirds of those revenues don’t come until after 2050.

In other words, even under the best case scenario, we’re only going to see minimal revenues over the next 25 years

$51 million that we could spend on anything

Finally, Curry notes “Of the remainder of the costs, some of it comes through money currently held in reserve for capital maintenance of Lansdowne (that the city has to pay regardless as we own 50 per cent of the asset) and some of it is through debt that will be repaid over 40 years …”

Again, incorrect. The city owns 100 per cent of the stadium and arena that they are planning to demolish. But more importantly, the city is actually proposing to spend $51 million on Lansdowne from its reserve balances, which council could decide to spent on anything.

What taxpayers should expect

I’ve thrown a lot of numbers at you. So let me sum up what all those costs and revenues mean.

Best case scenario is $246 million in revenues, with taxpayers on the hook for the remaining $247 million
If the Lansdowne financial plan delivers what it promises, we get $246 million in revenues.

Assuming the Auditor General’s cost of the project at $493 million, that leaves taxpayers on the hook for a quarter billion dollars.

Historical baseline scenario is $125 million in revenues, with taxpayers on the hook for $368 million

If we have a repeat of past performance, and the gity does not get any waterfall distributions, then revenues add up to only $125 million.

Assuming the auditor general’s cost of the project at $493 million, taxpayers would be on the hook for $368 million.

Most realistic scenario is somewhere in between, with taxpayers on the hook for about $300 million

We don’t have a crystal ball to tell us how Lansdowne 2.0 will perform. So the most realistic scenario is somewhere between the best case and the historical baseline.

Let’s assume a mid-case scenario where taxpayers are on the hook for about $300 million.

Using the city’s borrowing assumptions (4.25 per cent interest rate over 40 years), that would amount to taxpayers paying about $16 million a year for Lansdowne. That is more than triple the amount that the city has been pitching to its residents.

In fact, the city is building up its debt reserves so that the city budget pays out $16.4 million a year in debt payments over the next 40 years. Plus another $1 million for parking. And if there are any cost escalations, it will need to go back to council and increase those debt service levels.

Taxpayers pay now, and hope the next generation gets some money back

A key feature of the Lansdowne proposal that Curry fails to mention is that the projected revenues are back-loaded, meaning that the bulk of revenues come after 2050.

The City assertion that taxpayers will pay only $5 million a year is highly misleading. Apart from the fact that it is calculated with highly optimistic financial projections, it is a mathematical average over 40 years.

It hides the reality of who pays now versus who might benefit later.

For the first decade or two, current taxpayers pay the costs up-front. We’ll be paying a minimum of $16.4 million a year, or closer to $20 million if we include parking costs and use the AG’s cost estimate.

In a couple of decades, the next generation of taxpayers might receive some funds back.

The one per cent Lansdowne tax

That’s why I’ve called it the one per cent Lansdowne tax.

The most realistic scenario is that taxpayers will pay about $20 million a year for the next couple of decades. That’s equal to the amount we get from a one per cent property tax increase.

If you have kids or grandkids, and if they choose to live in Ottawa, they might get some of that money returned to a city hall of the future.

But to say that Lansdowne will only cost taxpayers $5 million a year is misleading.

Neil Saravanamuttoo is a former G20 infrastructure chief economist, director of CitySHAPES and the author of The 613 on Substack. Republished by permission.