OSEG and the City and the lopsided partnership

By Bob Brocklebank

It is encouraging to see that Lansdowne continues to elicit comment from across the city. But what seems to have been forgotten in the discussion is the prime reason for the current debate –making the partnership sustainable.

The partnership between the City of Ottawa and Ottawa Sports and Entertainment Group (OSEG) is a strange arrangement. In my opinion, the partnership’s objective is to obscure the degree to which Ottawa taxpayers are pouring resources into the arrangement. That objective has been splendidly achieved.

Let’s look at the parties involved. On the one hand you have the Ottawa Sports and Entertainment Group, a closely held private corporation. The owners are four or so wealthy individuals. OSEG is not a corporation listed on a stock exchange in which the public can buy shares. It is not obligated to issue public statements of account. At any moment, the owners of OSEG can decide to wind up the corporation or, if they wish, to have the corporation declare bankruptcy. The public has no right to know if any of the owners of the corporation have pledged any of their assets in support of OSEG or if bankruptcy would be a simple loss of investment made to date.

The other partner is the City of Ottawa, a municipal government created by the province. It is unlikely that the province would permit Ottawa to go bankrupt. Financial undertakings by the City are backed by the taxation power of the City and, theoretically, by the greater authority of the province.

Thus, if we are considering the continuity of the partnership, it appears that one partner can readily walk away, leaving the other partner responsible to pick up the pieces. Moreover, the partners are not treated equally within the partnership.

The City owns all the land at Lansdowne and it owns the stadium and arena. But as landlord, the City receives only nominal rent – one dollar a year! The City put up $110 million to rehabilitate the stadium and arena plus further money for the parking garage, but under the terms of the partnership, none of this is “deemed equity” to justify any return to the City. By contrast, investment by OSEG in the teams or the facilities is recognized as equity and is to receive an eight-percent return with measured repayment of that equity taking precedence over any payment to the City.

Moreover, there are other payments by the City that conveniently have been forgotten. The City gave a grant to the 67s to play elsewhere while work was underway on the arena. The City provided funds for the EY Centre, which was built to provide exhibition space lost in the Lansdowne redevelopment. Risk which the City has taken on board through the partnership is unclear. Could the City be left with the football and hockey teams and their associated debts? Is the City responsible for mortgages on the retail buildings? What are the City’s responsibilities in maintaining the foundations supporting the residential and office buildings constructed on top of the parking garage?

As long as the City owns the land, the stadium and arena, those values do not figure in the calculation of property tax. While the residential and commercial buildings pay tax, the land under the buildings is tax-free. The stadium element of the partnership is not paying property taxes, in contrast to the Canadian Tire Centre in Kanata (which has its own tax classification).

The partnership has produced benefits, but still is said to need to be “sustained.” Before residents of Ottawa stump up more money for the continuation of the Lansdowne arrangement, a serious discussion is needed to review what the past decade has produced, what benefits have been realized and for whom. Until there has been a comprehensive discussion, we should resist being stampeded into a quick acceptance of any additional commitments.

Bob Brocklebank is a long-time Glebe resident and the Glebe Community Association representative on the Federation of Citizens’ Associations.

TAXPAYERS DESERVE OPTIONS FOR SOLVING LANSDOWNE’S FINANCIAL PROBLEMS

By Carolyn Mackenzie

Taxpayers deserve more than just a “take it or leave it” proposal to address the financial challenges facing the Ottawa Sports and Entertainment Group (OSEG) at Lansdowne. However, the City refuses to engage in discussions regarding alternatives.

At the heart of the proposed Lansdowne 2.0 development is a new arena for the 67s, which would double as a new performance venue. It will cost upwards of $200 million and reduce valuable green and park space. The city’s refusal to consider alternative locations that could offer more benefits to taxpayers raises serious questions about what is influencing the decision-making process.

Make no mistake – the Lansdowne 2.0 proposal is a response to OSEG’s ongoing financial losses. OSEG is now seeking a new deal and asking taxpayers to make a total investment that will likely reach $400 million, only 10 years after Lansdowne 1.0 was completed. However, before committing to such a substantial investment, taxpayers have a valid concern: Where should a new arena be located to maximize accessibility for all Ottawa residents, provide city-wide advantages and contribute to the overall financial viability of the City?

For those living nearby, the convenience of walking or biking to a 67s game or a concert at the Civic Centre is undoubtedly appealing. However, OSEG and numerous Ottawa residents from Kanata, Orleans and South Ottawa have highlighted transportation as the Achilles’ heel of Lansdowne. The lack of good transportation options leads to fewer attendees and, consequently, financial difficulties for Lansdowne. Unfortunately, ongoing challenges after 10 years of operation demonstrate that there are no easy answers.

Modern arenas and larger concert venues are typically built near highways with extensive vehicle parking lots or near LRT or rapid transit systems. Lansdowne offers neither of these. Constructing a massive parking lot is

What is driving the city’s refusal to discuss them?

unfeasible, the site is not adjacent to a highway and an LRT along Bank Street is unlikely to materialize any time soon. Given that the City is already investing billions in Ottawa’s LRT, making a substantial investment in a new venue that does not align with or support the LRT is highly questionable. The idea that Ottawa is poised to do it raises concerns about the decision-making process and what information is being provided to decision-makers.

So, it is surprising that city staff recently advised that they would not consider alternatives for relocating the new event centre off-site (or even rebuilding in its current location). This contradicts earlier statements suggesting that nothing was set in stone and that robust public consultations could be expected. The lack of flexibility in exploring reasonable options raises questions about what is influencing this resistance. Staff have also stated that they are now considering options that are not revenue neutral, contrary to council direction. On what basis do they ignore council direction on one key element but not show flexibility on another?

In light of these concerns, the Glebe Community Association (GCA) recently wrote to the City, requesting that residents be presented with real alternatives to the key elements of the Lansdowne 2.0 plan. The GCA specifically urged the City to explore options for relocating the arena and performance centre to city-owned or other viable sites located near the LRT. The GCA once again emphasized the need for informed and meaningful public consultations, which have been absent from the process thus far.

While Glebe residents would miss the convenience of walking to arena events at Lansdowne, accessing a new venue (such as Bayview Yards, Tom Brown Arena or Coventry Road) would not be an extreme hardship compared to what other residents across the city face now. It is essential to evaluate whether locating the venue near the LRT makes better sense, both financially and from the larger perspective of the livability and attractiveness of Ottawa. It is crucial to assess the available options and engage in open discussions to ensure the best outcome for all taxpayers.

John Crump President Glebe Community Association

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