Lansdowne 2.0: Whatever happened to the promise of public consultation?

Financial implications for city taxpayers

By Alexandra Gruca-Macaulay

City of Ottawa staff are charging ahead with Lansdowne 2.0 once again. The City’s proposed plan to rescue the financial sustainability of its partnership with the Ottawa Sports and Entertainment Group (OSEG) involves a new, expensive construction project at Lansdowne. Despite public assurances by then Mayor Jim Watson and City staff that the approvals of the Lansdowne 2.0 report last June were only intended as a “check-in” with Council to be followed by robust public consultation before final decisions are made, staff are now moving forward with the 2.0 plan and intend to ask the City’s Finance and Corporate Services Committee for final approval in early July.

Although the City already spent $173 million on revitalizing Lansdowne just 10 years ago, its partners are dissatisfied with Lansdowne’s financial performance to date. The Lansdowne 2.0 plan calls for the City to spend at least another $332 million and likely much more on top of that for related infrastructure, soil remediation and a number of other uncosted items. Slated for demolition are the newly built retail space that houses GoodLife Fitness, the Civic Centre arena and the northside stands of the football stadium.

Construction would involve a new retail platform/podium, topped by three high-rise towers ranging from 29 to 40 storeys. The north-side stands would be rebuilt, and a new arena and event centre would be moved under the hill (berm) that sits at the east end of the stadium.

The City would fund its costs from a variety of sources, including $239 million in new debt. To help repay this debt, the City plans to syphon away 90 per cent of the property taxes assessed on the retail podium and residential towers when the project is “good to go,” then divert these property taxes to debt repayment each year for 40 years – the City has named the scheme “Property Tax Uplift.”

If the project goes ahead, the City would be exposed to about half a billion dollars in either direct or indirect debt repayment obligations

If the project goes ahead, the City would be exposed to about half a billion dollars in either direct or indirect debt repayment obligations. In 2013, the City took on $154 million in debt to help pay for Lansdowne 1.0; $239 million more is needed for 2.0. Along with this direct debt, the City has issued several guarantees in support of longterm loans that would need to be repaid by the City in the event of default. In 2014, the city manager used his delegated authority to issue a guarantee for OSEG’s retail loan – about $100 million of this loan is still outstanding. In 2015, the City and OSEG settled a dispute over the $23.6 million that OSEG spent to fix the Civic Centre roof. Under threat of legal action, the City settled with OSEG by having the partnership take out a loan to repay OSEG and getting the City to guarantee this loan –the roof loan still has about $18 million outstanding. (Ironically, the roof itself would be torn down under 2.0).

In 2020, OSEG asked to restructure some of the terms of its partnership agreement; the City staff report cautioned that if OSEG’s requests were not approved, there was a “very real risk” that OSEG might default leaving the City (i.e., taxpayers) responsible for repaying both guaranteed loans. Finally, Lansdowne 2.0 would require the City to issue a guarantee in support of OSEG’s $30-million, retail-podium loan. If Lansdowne 2.0 goes ahead, then the City’s total outstanding Lansdowne debt would be approximately $339 million, and its loan guarantees would be about $148 million – close to $500 million in total. On top of that, the City would fund $93.6 million from other sources for the remainder of its costs.

Concern is mounting that time is running out for the possibility of engaged consultation for a very costly – second only to the LRT – yet poorly understood City project. The Glebe, Old Ottawa East and Old Ottawa South community associations along with the Federation of Citizens’ Associations, Parkways for People and Synapcity wrote Mayor Sutcliffe and city councillors in late February asking that “no further decisions…be taken until there has been meaningful consultation with the community.”

Given how much the economic climate has changed (with rising inflation and interest rates) since the Lansdowne 2.0 financial projections were first presented, the letter also called for an update of financial data and a risk analysis aimed especially at financial projections for Lansdowne’s retail space, the part of the plans being counted on the most for generating future financial success. The letter also called for full disclosure of financial statements for each part of the partnership “bubble”: retail, stadium, Redblacks and Ottawa 67s.

In early March, the City, through its Engage Ottawa site, launched its public engagement strategy with a survey that Councillor Menard has called “concerning.” The short survey asks what some have called limited “marketing” type questions, like “How did you hear about the proposed Lansdowne 2.0 revitalization?” Community representatives have asked staff to include Property Tax Uplift on the site’s list of defined terms, to inform the public of the loss of 58,000 sq. ft. of public greenspace around the berm because of the new event centre’s non-accessible roof and to include the fact that the Lansdowne 2.0 staff report has stated that the Civic Centre and north-side stands are structurally sound. Staff thus far have been unwilling to update the information as requested.

Alexandra Gruca-Macaulay is a professor at Saint Paul University and an Old Ottawa East resident.