Councillors troubled by Lansdowne report
OSEG owners want to contribute an extra $40M to cover COVID-19 losses, but ask for city flexibility
Some councillors are troubled by a new report that recommends the City of Ottawa amend a complex, 30-year deal with private partners at Lansdowne Park in order to keep the arrangement going.
Coun. Shawn Menard, who represents the Glebe, listed a number of questions he had arising from city staff's recommendations, which he was briefed on shortly before the report became public Wednesday evening.
"I am concerned about a short-sighted stop-gap measure created out of panic and without sufficient reflection, which could turn into a long-term liability for Ottawa," he said in a statement.
Ottawa Sports and Entertainment Group (OSEG) told CBC News that after almost seven years, the public-private partnership was on the verge of breaking even when COVID-19 hit, but now it estimates losses of $40 million over the coming five years.
The Ottawa Redblacks and Ottawa 67s and other teams OSEG owns aren't selling tickets to games at TD Place. Rent collection from the shops and restaurants that OSEG runs for the partnership was less than 50 per cent between April and September, according to city staff.
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With a $106 million mortgage on the retail sector needing refinancing in a couple of years, city staff reported that OSEG might find its best choice is to default, leaving the municipality responsible for operating the entire site — the stadium and arena, and commercial areas — and spending millions a year to do so.
OSEG owners to inject $40M
But the notion of default came from city staff, not OSEG, said CEO Mark Goudie, who maintains OSEG owners — Roger Greenberg, William Shenkman, John Pugh, and John Ruddy — are local business leaders and want to see Lansdowne succeed.
"This is personal for them. I think they just want to know that if they're willing to step forward with another $40 million, which they're willing to do and want to do, that their partner in the city can show some flexibility," Goudie said.
OSEG approached the city to ask for access to the $4.7 million it has put into a reserve account for maintaining the parking garage and stadium, an extra decade on the deal to give them until 2054 to recoup losses, and to change the arrangement so that the city doesn't share in the cash flow from retail rent until 2066.
In the report, staff themselves write that when it comes to Lansdowne's potential risks and rewards, the partnership has become an imbalanced one. OSEG currently stands to have contributed $192 million in capital rather than the $55 million expected in 2012.
"OSEG has been more expensive to the owners than they anticipated," said Goudie.
City staff say agreeing to the changes would mean less risk for the municipality, and OSEG would continue to be responsible for covering operating deficits for an extra decade.
Public meeting Nov. 10
But Menard, who has raised concerns about potential risks of public-private partnerships in the past, doesn't see it that way and questions long-term changes to the complicated Lansdowne agreements.
"There is no way to guarantee that the proposal will keep OSEG solvent for more than a year, and no contingencies for what happens should we find ourselves in this exact same situation in the near future," he wrote.
He has planned a virtual community meeting for Nov. 10, two days before the report heads to finance and economic development committee on Nov. 12. Menard questions the timing, too, noting the auditor-general's review of Lansdowne's accounting and so-called "waterfall" agreement is to be presented at the end of the month, one day before council would agree to change the OSEG deal.
A report now live asking Council to support a $4.7M OSEG bailout forces us to make hard choices. It’s only a few minutes live, but I keep asking, why are we telling the housing sector no if we can tell OSEG yes. I’m willing to explore whether failure might mean opportunity.—@JLeiper
Other councillors also reacted to the surprise report, which goes far beyond the annual financial rundown, with skepticism.
Coun. Diane Deans said she never believed the Lansdowne redevelopment to have been in the city's best interests, and voted against it in 2009.
"I am fully willing to admit COVID has been very hard on everyone and it has no doubt been hard on Lansdowne," said Deans. "But it is a pattern. This is not a one-off. This has been going on since the start of this partnership."
Last year, OSEG tried to take over the city-run urban park in a bid to boost visitors and revenues. While that plan was withdrawn, this current report would create a new working group between city staff and OSEG to consider how to make the site more viable post-COVID-19, which could include looking at the aging north-side stadium stands.