Ottawa city council has approved the final plan for the redesign of Lansdowne Park, one that includes changes to the financial plan first put to council in 2010, by a vote of 21-3.
The only councillors who voted against the plan were Diane Deans, Diane Holmes and David Chernushenko. As expected, the majority of city councillors wanted to see the deal completed in order to begin construction.
Major construction could begin as soon as Monday, Oct. 15.
Ottawa Sports and Entertainment Group is likely to see a large share of early returns from Lansdowne Park, in part because they have shouldered the early load on costs leading up to the project.
As part of their partnership to redevelop the park, the city and OSEG came up with a formula to determine the equity stake each had in the project. The funding equity is a measure of both investment in the project as well as risk.
In 2010, OSEG's initial investment, or funding equity, was set at $30 million. But delays and design changes mean they're now investing $56 million.
"We're putting a lot more equity into this than we ever expected, and so the risk to us, is much much greater than it was in 2010," said OSEG chair Roger Greenberg.
OSEG is also on the hook for any more cost overruns.
Equity in 'waterfall' formula has changed
The city's funding equity stake, by comparison, has dropped from $13 million in 2010 to $2.5 million last year and is now at zero. The equity dropped in part because lower-than-expected interest rates mean the city's cost and risk for borrowing to pay for its share of the project has also declined.
That's important because early cash distributions from the redeveloped Lansdowne are in large part based on the funding equity the two partners put into the project.
The agreement calls for a "waterfall" payment system, in which payments are to be delivered in levels, where level one payments are first handed out before any money is delivered to level two.
The first level of payments goes to the city's lifecycle fund — for maintenance and other costs associated with the park — but after that, the next three levels of payments go to OSEG.
Outside of lifecycle payments, the city's next chance to earn cash is in level 5 of the waterfall, when it receives annual payments of eight per cent of its deemed equity — valued at $61 million. But the city doesn't project it will start to receive that money until 2033 at the earliest.
Construction could begin Oct. 15
Michael Tiger of Friends of Lansdowne, the group that has long opposed the project, said the deal is too favourable to the developers.
"[There's] no incentive to keep the cost down, if you can consider a cost overrun as additional equity, and then get paid back for it," said Tiger.
Under the updated agreement, the city's share of waterfall cash will be $152.1 million over a 40-year span, up from $141.4 million projected back in June 2010.
But the city's share of total waterfall revenue has dropped from 54.9 per cent to 48.4 per cent.
However, the city will receive additional revenue from a redeveloped Lansdowne Park in the form of property taxes from the retail, business and residential tenants.