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Originally Posted by Richard Eade
Denley has an interesting take on things in his completely biased opinion piece that puts forth no facts to back up his position.
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I am no Denley fan, and I don't agree with all of his statements, but he does get to the crux of the rationale for the plan. Not to nitpick, but you have quite a few false assumptions and factual inaccuracies in your rebuttal of the "biased" opinion (don't all opinions betray some bias?)
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There are many facets to the arguments, and I’m hoping that I am not as biased in saying that it is the process that led to, in my opinion, a poor outcome that was the problem.
Way back in time, there was a large expanse of property near the middle of the city that the City owned. Seeing a development opportunity a group of business-people put forth an idea that they could make it more productive. They suggested that, instead of costing the City about $4M per year, they could redevelop a small portion of the land and manage the rest so that it would generate positive cash-flow for the City.
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Generating positive cash flow was never the actual justification for the plan. Taken at their word, "consortium" wanted to run sports teams out of Lansdowne, which was decaying, and proposed the PPP model to generate the funding to fix the place up and make the teams viable. I believe that most people see the partners as genuinely wanting to revive football and put soccer and hockey on a solid footing (which they did). I would suggest that it is the opponents of the plan who created the narrative of developers who used sports as a ruse to get their hands on public land. Those accusations never really rung true, as the partners have been all in on the sports teams.
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Part of that deal, required the City to pay to replace the south stand of the stadium, which was at the end of its useful life. But the income from the small, redevelopment, section would easily offset that cost. The offer looked too good to be ignored, so the City accepted. The City would pay to replace the City-owned south-side stand, and the business consortium would add retail and manage the entire property. It was going to be great, and the City would soon be awash with income from a ‘waterfall’ of money.
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Again, not really. The money from the waterfall went primarily towards the operation of the site, then the debt from the renovations, and then the developers and the City. There were definitely optimistic projections regarding revenue, but profit for the City was never the primary motivation for the waterfall. Not to mention that Covid put a damper in the revenue projections for Lansdowne and just about every other business on the planet.
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So the City paid for replacing the City’s south-side stands and some minor repairs to the rest of the facility on the north-side. The consortium paid for the new retail facilities, which they built on part of the City’s land. Income from the new retail was supposed to help the City offset the money that it had paid for renewing its aging facility.
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Income from the new retail did help the City offset the money it paid to renovate the facility. That is exactly how the waterfall works.
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Alas, several years later, the business-people returned to complain to the City that the retail that they had built on the City-owned land wasn’t making any money.
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Actually, the retail has been the most profitable part of the project.
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And, because the remaining sports facilities on the north-side, which had only gotten minor fixes previously, were so old, the consortium couldn’t manage the property effectively. The only answer, according to the consortium, was for the City to pay to replace all of the remaining infrastructure. The new facilities would cost a lot, but they were the City’s responsibility. Not to worry, though; to simplify the task, the consortium would tell the City exactly what sports facility to build to so that the consortium could maximize the monetary returns.
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Well, the consortium does own the teams that play there, so it does make sense that they would tell the city what facilities make sense (which are basically updated versions of what is already there, so not exactly the consortium running wild with demands). Vastly more people have gone to Lansdowne to watch sports since OSEG started managing it than in the prior five decades - why exactly wouldn't we listen to them?
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And to guarantee that there are enough people around to make the new facilities profitable, the City will also need to allow the consortium to build new high-rise buildings on the City’s property. And, the income from the air-rights for those towers would offset some of the cost of the sports facility cost. This was, the City was led to believe, the only way to recoup any of the money that the City was putting into the sports facility that it was building for the consortium. And it would take a much longer time for pay-back, so the consortium would need to manage the entire site for the next 50 years.
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This isn't correct. The consortium is not building high rise towers. The City auctioned them off to other builders. Also, this was not the only way to recoup the money put into the facilities - it is a relatively small piece of the revenue puzzle. The air rights have nothing to do with the extension of the management contract.
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OK, when I read through that, it just sounds like the plot of a ‘C’-grade, silly movie. Let’s look at things a little more realistically:
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No comment.
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The Civic Centre was almost 60 years old. The design was ‘interesting’ and managed to cram a lot of utility into a small space – leaving a large portion of the City-owned land open for other purposes. In minimizing the footprint, however, compromises were made. This made the old facility feel dated and cramped. It also lacked modern accessibility features.
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The Civic Centre actually has a massive footprint. And the facility feels dated because it is dated.
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I think that there is little argument that if Lansdowne was to continue to be used as a mid-sized, public sports venue, money had to be spent on it. It is unclear as to whether an extensive renovation would have been enough to bring the Civic Centre building up to modern standards. At the very least, the arena would likely have had to be moved north to pull the stands out from under the rooms.
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I think this is true. It would have been interesting to see a more detailed estimate of the cost of renovating the current facilities. But I don't hold any illusions that it would have been a cheap alternative.
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The best option was probably to replace the building – just as the best option years ago for the south-side stands was a full replacement. Replacing the Civic Centre building would probably have cost the City $350M-$550M. This is what the City is paying now.
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Yep.
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The difference is that the consortium is dictating what the City is to build so that the consortium can maximize its profit from the City’s expense. I believe that this is the fundamental flaw with what is happening at Lansdowne. A group of business-people came in and are telling the City what to spend the City’s tax dollars on so that those business-people can run a new – built for them – facility for profit for the next 50 years.
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Not sure how this is at the City's expense. This way the City pays $400 million and that cost is offset by the revenues from the site and the teams. The other way, the City just pays in the ballpark of $400 million. And either way, the City wasn't going to operate the sports teams, so you need "businessmen" for that.
Also, you can't have it both ways. Either the teams and retail are losing so much money that Lansdowne is a money pit, or the owners are profiting handsomely from all of the money they are making. It's one or the other, not whichever one suits the narrative. (And for the record, OSEG has not recouped its investment in the project for a variety of reasons.)
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It is my contention that the City should have done an evaluation of what sport facilities it needed to provide TO THE CITY. That includes the needs of professional teams that use those venues, but also any needs of members of the public. The City is the entity paying for the facility. It should have been designed for the good of the city, not for the wants of a consortium of business-people
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Not sure what this means. I would say that the existence of the sports teams and other events are for the good of the city judging by the number of people attending events at Lansdowne, and that the people making those events happen have a pretty good idea of what they need to keep that going. To have them collaborate with the City to design the project just makes sense.
And no, the City is not paying for the whole project - the revenues from the retail and teams operated by the consortium go into the waterfall which goes towards the debt incurred to build the project. I honestly think that people have completely forgotten the basics of the financial structure of the partnership.
In short, you've told a good story, but you are very loose with the facts. Denley's article isn't perfect, but it's a lot closer to being an accurate representation of the reasons for the project.