LeBreton Flats 2.0 (RendezVous LeBreton) | Cancelled

[Acajack]

Big business lawsuits and counter-suits of this nature very rarely result in one party being told "pay the other guy 1 billion dollars now!".

The Sens may indeed be in trouble at some point, but I doubt it will be because of this.

[phil235]

Originally Posted by kevinbottawa

Wouldn't the NHL get Melnyk to sell rather than relocate the team? The problem isn't the market, it would be him not having enough wealth after paying Trinity (if they were successful in their counter suit). Seeing how hard they worked to keep the Coyotes afloat I don't see them letting Melnyk move the team.

Absolutely. The first option for the league would be to find a willing buyer in Ottawa. I was just noting that the NHL would not likely have any claim to damages here, even if the Sens were to become insolvent and that was somehow linked to something that Trinity did in the redevelopment of Lebreton.

Who knows, Trinity could be part of a group that makes an offer for the team. The NHL has more incentive to work with them than to sue them.

[c_speed3108]

...and now they are negotiating in public

Twitter - 1310 news reporter

Jason White (check!)
‏ @1310JasonWhite
43m43 minutes ago

#BREAKING: Eugene Melnyk's Capital Sports Management proposes it forfeit its share of the profits from developing LeBreton Flats if Trinity Development Group pays for building the NHL arena. This comes after Trinity countersued Melnyk and CSMI earlier today. #ottnews

That is an interesting development. Halfway to someone else running things.

[pattherat]

Originally Posted by McC

Nothing stopping Claridge from moving forward with their remaining parcels, if they can line up the resources.

Yep, if I were claridge I would be full steam ahead on marketing and build in order to beat these other developments to the punch.

Hoping to see that soon, otherwise I think they are losing an opportunity brought about by this.

[YOWflier]

And Trinity shoots down this rehashed new proposal for a free rink faster than Twitter can tweet.

Melnyk is seriously unwell. He should seek help... as far away from our city as possible.

[acottawa]

So did the NCC ask literally zero questions in the last three years? What is clear from these statements is that the partners had absolutely no understanding of the finances for this project or any agreement on how to proceed.

[J.OT13]

Melnyk proposes restructured partnership to salvage LeBreton Flats redevelopment

Ottawa Business Journal
December 18, 2018

The same day that Eugene Melynk’s Capital Sports Management was hit with a $1-billion countersuit by its partner in the redevelopment of LeBreton Flats, the Ottawa Senators have publicly proposed a deal with John Ruddy’s Trinity Development Group that the team says would allow the project to proceed.

In short, the proposal – released to the media Tuesday evening – would see the Senators-backed CSMI dramatically reduce its involvement in the project, turning over its interest in the retail, residential, commercial and recreational components of the project to Trinity.

In turn, Trinity would be responsible for financing the new NHL arena. CSMI would “focus on the design, development and management” of the facility and be responsible for lifecycle costs during its lease.

While the Senators did not mention any proposed financial terms of the arena lease, a Trinity spokesperson said Tuesday that Melnyk and CSMI have demanded “a free arena courtesy of local taxpayers and Trinity.”

Senators chief operating officer Nicolas Ruszkowski did not respond to messages requesting further details on the team’s proposal.

CSMI’s proposal is the latest in a public war of words that erupted late last month when Melnyk and CSMI launched a $700-million lawsuit against Ruddy and Trinity.

The crux of the lawsuit alleged that Trinity was in a conflict of interest over its nearby development of a three-tower mixed-use project at Bayview Station that CSMI argues makes the LeBreton Flats redevelopment unviable in its current structure.

“If Trinity is correct in its belief that the LeBreton Flats project remains viable and profitable despite the impact of 900 Albert Street, then it must also conclude that this deal enables Trinity to collect greater profits than it would have under the original structure of the deal,” CSMI said in its statement.

https://obj.ca/article/melnyk-proposes-r...hip-salvage-lebreton-flats-redevelopment

[rocketphish]

Ottawa Senators make proposal to salvage downtown arena deal, developer files $1B counterclaim

Jon Willing, Ottawa Citizen
Updated: December 18, 2018

Eugene Melnyk is ready to let business partner John Ruddy build the entire LeBreton Flats project and pocket all of the revenue, so long as Melnyk’s Ottawa Senators can run the arena.

The offer emerged during a public back-and-forth between the two warring RendezVous LeBreton partners Tuesday — the same day Ruddy was filing a $1-billion counterclaim against Melnyk.

Ruddy’s company, Trinity Development, didn’t say no, but it appears to be cool to the idea.

That leaves the future of the plan to bring the Senators downtown and to turn a swath of contaminated land into a bustling new community more doubtful as the days inch closer to a National Capital Commission meeting next month.

The two businessmen, who are the main partners of RendezVous LeBreton Group, have the exclusive rights to redevelop the Flats, but their plan for an arena surrounded by a new mixed-use community has been cast into doubt by their imploding partnership.

On Tuesday, Melnyk’s company Capital Sports Management Inc. publicly released its proposal after Ruddy had filed the counterclaim to an earlier $700-million lawsuit from the Sens owner.

In a written statement, CSMI proposed to assign its interest to Trinity for the residential, retail, commercial and recreational elements of the LeBreton Flats plan. Trinity would collect all the revenue.

In exchange, Trinity would finance the $500-million arena, instead of CSMI. Any profits from the massive redevelopment of LeBreton Flats would be Trinity’s alone under the CSMI pitch.

CSMI proposes to pay for the operating and life-cycle costs of the arena during the lease term.

Trinity swiftly criticized CSMI’s idea.

“Our court filings today made clear that Mr. Melnyk and CSMI have been demanding a free arena courtesy of local taxpayers and Trinity,” Trinity said in a written statement. “Mr. Melnyk’s letter does little more than confirm that fact. On its surface, it appears nothing has changed.”

Meanwhile, the legal manoeuvring continued.

Ruddy’s counterclaim alleges the hockey magnate’s company is on shaky financial footing and has been the main reason why their LeBreton Flats redevelopment partnership is ruined.

While CSMI’s original lawsuit alleged it was kept in the dark about a Trinity-involved development planned across from LeBreton Flats at 900 Albert St., Ruddy’s statement of defence alleges CSMI and Melnyk knew about the multi-tower project all along, pointing to Senators former chief executive Cyril Leeder as being “well informed” about the future 65-storey complex.

CSMI accuses Ruddy of using the LeBreton Flats project to bolster the 900 Albert development, but Ruddy’s statement of defence calls that poppycock. The project at 900 Albert would be “complementary” to the LeBreton Flats redevelopment, the statement of defence says.

Trinity has spent millions of dollars on the LeBreton Flats project and “it would be logically absurd and financially self-destructive for Trinity to somehow undermine LeBreton via 900 Albert,” the statement of defence says.

None of the allegations made during this legal battle has been tested in front of a judge.

In its lawsuit, CSMI pulled back the curtain to reveal inner workings of RendezVous, including details about negotiations with the NCC and the City of Ottawa.

Ruddy yanks the curtain right off the rod in his response filed in court, alleging that Melnyk was persistent in trying to get a free ride on a downtown arena.

According to the statement of defence, CSMI and Melnyk wanted the City of Ottawa or Trinity to fund and build the $500-million arena for the Senators with the hockey club getting 30 years of free rent. CSMI also wanted power over the naming rights “and an unreasonable degree of control over the LeBreton project,” the statement of defence alleges.

In Ruddy’s version of events, CSMI and Melnyk were still trying to get others to pay for the arena as late as last month.

The statement of defence says Melnyk suggested on Oct. 4, 2018, that Trinity fund and build the arena while Melnyk would pay annual rent of $1. That would be in exchange for Trinity’s becoming master developer for the entire project, the statement of defence says.

Ruddy’s statement of defence suggests the two sides had a deal in October to make Melnyk a tenant of the arena, but Melnyk then didn’t want to pay rent.

CSMI was trying to remove itself from the RendezVous partnership but still get to use the arena for virtually nothing, the statement of defence says.

The statement of defence says CSMI sent a term sheet in November calling for Trinity to guarantee $500 million for the arena, while the City of Ottawa would pay half of the arena construction costs. CSMI would get free rent and have power over the naming rights, the statement of defence says.

“The proposed withdrawal conditions were commercially unreasonable,” the statement of defence says. “They were made in bad faith.”

(Mayor Jim Watson has said repeatedly he won’t support municipal tax money going to build a downtown arena).

Judging by the lawsuit and statement of defence, the relationship between Ruddy and Melnyk was sour from the time the NCC selected RendezVous as the preferred proponent for the LeBreton redevelopment in April 2016.

Ruddy’s statement of defence describes “outbursts” by Melnyk against CSMI consultant and RendezVous project manager Graham Bird, “culminating in an incident” at the NCC’s public announcement of RendezVous having preferred status. The statement of defence doesn’t describe the incident. CSMI fired Bird, who was then hired by Trinity.

CSMI has named Bird as a defendant in the lawsuit. Bird has said the allegations are all false.

According to Ruddy’s statement of defence, CSMI tried to dump Trinity two months after RendezVous was named preferred proponent.

By September 2017, Trinity and CSMI’s lawyers nailed down financing for the LeBreton project, but CSMI and Melnyk failed to sign the term sheet, the statement of defence says.

Ruddy alleges a lack of money on CSMI’s end is driving its lawsuit.

“CSMI’s conduct compels the inference that CSMI’s strained financial circumstances underlie this litigation,” the statement of defence says. “This best explains its strategic attack on Trinity. It has admitted lacking the cash to contribute to its joint venture obligations.”

The statement of defence says CSMI has been evading its financial obligations under the original Trinity-CSMI agreement to form RendezVous. CSMI wouldn’t pay for half of the municipal planning fees, the counterclaim says.

Under Ruddy’s counterclaim, he alleges he has swallowed expenses tied to the LeBreton project and he wants compensation from Melnyk and CSMI, to the tune of $1.005 billion. Most of the amount is tied to alleged abuse of process by CSMI and Trinity’s alleged loss of opportunity, future profits and goodwill.

According to the counterclaim, Trinity has sunk about $3.8 million on the LeBreton project so far.

The legal standoff between Ruddy and Melnyk could become a sideshow to the NCC’s job at hand: breathing life into LeBreton Flats.

The NCC board of directors is scheduled to decide what to do about RendezVous during a meeting in January. The NCC will get a new CEO, Tobi Nussbaum, just days after the meeting. Nussbaum is replacing Mark Kristmanson.

The runner-up in the NCC’s LeBreton Flats redevelopment competition, Devcore Canderel DLS, has indicated it’s ready to take over the project if the NCC dumps RendezVous.

[email protected]
Twitter.com/JonathanWilling

https://ottawacitizen.com/news/local-new...nterclaim-over-failed-downtown-arena-bid

[Kitchissippi]

This is almost as bad as Brexit

[AuxTown]

Originally Posted by acottawa

So did the NCC ask literally zero questions in the last three years? What is clear from these statements is that the partners had absolutely no understanding of the finances for this project or any agreement on how to proceed.

My thoughts exactly! How did we get so far into this process without it being very clear who is paying for what and how. It should have been obvious from the outset that Melnyk doesn't have the "how". He is basically bluffing and thinking that his ownership of the sens will somehow make him a partner in this multi-billion dollar project

[JHikka]

Originally Posted by Kitchissippi

This is almost as bad as Brexit

The difference being that an arena at Lebreton can actually happen in this physical realm.

[J.OT13]

If I'm understanding this right, the offer Melnyk presented Ruddy yesterday was the same offer Ruddy presented Menlyk in October? Well damn, should have accepted it in October! Too late now!! No one in their right mind will ever want to work with Melnyk anymore after this unnecessary lawsuit. SELL THE TEAM AND MOVE ON! Let Ruddy and a more capable owner handle this for the sake of the fans. Melnyk had a point with 900 Albert, but it doesn't matter anymore. He burnt the last bridge.

Bagnall: How did Eugene Melnyk and John Ruddy ever think they could do business together?

James Bagnall
Postmedia
December 19, 2018

How did these guys think they could ever do business together?

As Trinity Development founder John Ruddy made clear Tuesday in his $1-billion counterclaim against Ottawa Senators owner Eugene Melnyk, the differences between these businessmen were not only legion, they ran extraordinarily deep and for a long time.

The conflicts, outlined as well in the initial $700-million lawsuit launched Nov. 23 by Melnyk, have been evident practically from the moment their joint venture — RendezVous LeBreton — was selected April 28, 2016, by the National Capital Commission as the preferred candidate for remaking LeBreton Flats.

The potential for dislocation was always there, given the extraordinary complexity of what was being attempted.

Melnyk and Ruddy had to simultaneously sort out their own teaming arrangements and negotiate terms with the NCC on a 20-year-long, $4-billion project featuring condominiums, retail shops, offices, a hotel and NHL arena, among other items.

This would have been difficult enough to do for partners who trusted one another. Early on, from 2014 to 2016, the trust was there as Ottawa Senators chief executive Cyril Leeder handled the bulk of the partnership talks on behalf of Melnyk. Indeed, it was Leeder who invited Ruddy to help form the team.

But consider how things played out the week the NCC picked RendezVous LeBreton: Graham Bird — the president of GBA Development and Project Management and RendezVous LeBreton’s project-management consultant — gave a television interview on April 28, 2016, to explain the main elements of the project. The following day, Ruddy alleges in his counterclaim filed Tuesday, Melnyk “threatened legal action” and demanded that Bird be barred from future meetings with the NCC.

Bird, who was also named in Melnyk’s suit, is expected to file a separate statement of defence later this month.

Ruddy explains in his litigation that he hired Bird as Trinity’s own consultant “to diffuse the situation, and knowing that the NCC valued Mr. Bird’s knowledge and expertise highly.”

This, alleges Ruddy, was the first in a string of concessions he made to keep RendezVous LeBreton from falling apart.

Ruddy cites an instance on June 20, 2016, when Trinity proposed terms for governing relations between Trinity and Capital Sports Management Inc., the entity controlled by Melnyk. “CSMI responded by demanding a financial proposal from Trinity within the next 90 minutes,” Ruddy alleges.

The litigation suggested that despite there being no explanation for such urgency, Trinity complied “to minimize the friction between the parties.”

Ruddy also claims Trinity gave ground on “a series of time-limited demands” made by Melnyk in connection with the initial draft NCC agreement.

The vast divide between Ruddy and Melnyk shows up in their differing perspectives over financing the LeBreton project, and the role of a nearby apartment-retail-and-office complex proposed for 900 Albert St.

Both Melnyk’s statement of claim and Ruddy’s counterclaim agree the two partners would each have a 50-per-cent equity interest in RendezVous LeBreton, at least through the early stages of the project, and that Melnyk would be responsible for the financing and design of the sports and entertainment component.

Ruddy asserts in his litigation that after Trinity negotiated terms for the LeBreton project in September 2017, “Melnyk refused to sign the term sheet.”

Ruddy further alleges that Melnyk declined to pay his 50-per-cent share of the costs for conducting environmental studies and filing zoning applications.

“CSMI’s conduct compels the inference that CSMI’s strained financial circumstances underlie this litigation,” Ruddy asserts, “Melnyk’s true aim is to have the City of Ottawa and Trinity fund and build the $500 million U.S. ($675 million Cdn.) event centre for the Ottawa Senators hockey, with the Senators getting 30 years free rent.”

Ruddy claims this was what Melnyk proposed during an Oct. 4, 2018, meeting between CSMI, Trinity, Mayor Jim Watson and representatives of the NCC.

On Oct. 16, according to Ruddy, Trinity proposed a revised teaming arrangement under which CSMI would be removed from the joint Rendezvous LeBreton venture, leaving Melnyk with no other role but tenant of the arena.

The Ruddy litigation suggests Melnyk responded with the following conditions: that Trinity would guarantee the $500-million US cost of building the arena; the City of Ottawa and Trinity would each pay half the cost; and the Ottawa Senators would lease the arena for $1 per year and retain naming rights.

“The proposed withdrawal conditions were commercially unreasonable,” Ruddy says in his counterclaim, “They were made in bad faith.”

The Ottawa Senators on Tuesday replied that this description mischaracterized what happened.

CSMI in a statement explains that it had proposed to Ruddy the following deal: CSMI would give up its right to its share of the LeBreton project’s profits and, in exchange, Trinity would use those to help finance the construction of the arena. Further, Melnyk sent a copy of this statement Tuesday to Ruddy, suggesting the arrangement is still open for negotiation — and could conceivably offer a way out of this legal mess.

It also appears to be Melnyk’s way of dealing with what he considers to be the intractable issue of 900 Albert.

Melnyk’s statement of claim — which accused Ruddy of “an egregious conflict of interest” for pursuing what CSMI called competing projects at 900 Albert and LeBreton Flats — alleged that the construction of nearly 1,300 apartments as well as retail and office space at 900 Albert would detract from the LeBreton project at a key phase of its development.

Melnyk and Ruddy in their suits cite competing real-estate reports to buttress their views of how the economics would play out. Melnyk appears to believe there is too much condominium and apartment construction downtown already, which means it will take years more than expected for LeBreton to become profitable. Ruddy, for his part, contends there is sufficient demand for housing to support both projects.

CSMI’s statement Tuesday is basically suggesting to Ruddy that if he believes so strongly that Ottawa’s housing market can underpin the Flats and 900 Albert alike, then Melnyk is willing to assign him all the associated profits.

If there wasn’t already so much bad blood between the partners, it might even be a tempting offer. But could they ever negotiate and agree to terms? History says that’s unlikely.

https://ottawasun.com/business/local-bus...wcm/07f94bc2-78b2-4548-9b22-25bc6908ced4

[acottawa]

Melnyk should put the team up for auction with a reserve price of the book value and a requirement that bidders put the cost of a new arena in escrow. If these mystery billionaires exist and are willing to drop a billion then everyone will be happy. If the mystery billionaires are of the imaginary variety he can go to the board and ask for a relocation.

[pattherat]

Originally Posted by J.OT13

If I'm understanding this right, the offer Melnyk presented Ruddy yesterday was the same offer Ruddy presented Menlyk in October? Well damn, should have accepted it in October! Too late now!! No one in their right mind will ever want to work with Melnyk anymore after this unnecessary lawsuit. SELL THE TEAM AND MOVE ON! Let Ruddy and a more capable owner handle this for the sake of the fans. Melnyk had a point with 900 Albert, but it doesn't matter anymore. He burnt the last bridge.


https://ottawasun.com/business/local-bus...wcm/07f94bc2-78b2-4548-9b22-25bc6908ced4

Hmmm, I’m not sure it was the same offer, or at least the counter from Melnyk in Oct doesn’t sound like it was acceptable to Ruddy.

I.e. The rent free tenancy and full naming rights. (I know I would tell him to take a flyer if he proposed that to me if I were owner of an arena. The Sens are a valuable tenant sure, but they are not the be all and end all of a successful facility!)

[J.OT13]

The next billionaire doesn't have to build the arena. Ruddy was ready to build it and have the Sens as a tenant. If the next owner isn't interested in investing in the real estate deal, he (or she) can just pay rent to Ruddy who will take in the profits from concerts, naming rights, concessions, parking... all of which Melnyk seemed to want to maintain as part of the free arena deal.

[YOWflier]

Yeah, he can ask for a relocation to a mystery location and the BOG would love the idea of foregoing >650M in expansion fees to said mystery location.

He can then build an arena in said mystery location with the money he doesn't have or rent an existing arena with the money he doesn't have.

When you're the root of all problems geography can't help you.

[acottawa]

Originally Posted by J.OT13

The next billionaire doesn't have to build the arena. Ruddy was ready to build it and have the Sens as a tenant. If the next owner isn't interested in investing in the real estate deal, he (or she) can just pay rent to Ruddy who will take in the profits from concerts, naming rights, concessions, parking... all of which Melnyk seemed to want to maintain as part of the free arena deal.

I suspect there was significant fine print in this offer. Remember you can say anything in a statement of claim without risking perjury or defamation.

I remain highly suspicious of Ruddy. He has never built anything but big box stores and seems to have limited financial resources. If the fan base is latching onto him as their latest saviour they may be disappointed again.

[acottawa]

Originally Posted by ac888yow

Yeah, he can ask for a relocation to a mystery location and the BOG would love the idea of foregoing >650M in expansion fees to said mystery location.

He can then build an arena in said mystery location with the money he doesn't have or rent an existing arena with the money he doesn't have.

When you're the root of all problems geography can't help you.

Expansion is done for the foreseeable future. Houston and Quebec have brand new arenas ready to go.

[YOWflier]

Yep, arenas that he doesn't own and revenue streams of which thus he would have no access to in a) once already failed and b) unproven markets. And that's if he gets the BOG to even agree to him relocating in the first place. Good luck with that.

[phil235]

Originally Posted by acottawa

I suspect there was significant fine print in this offer. Remember you can say anything in a statement of claim without risking perjury or defamation.

I remain highly suspicious of Ruddy. He has never built anything but big box stores and seems to have limited financial resources. If the fan base is latching onto him as their latest saviour they may be disappointed again.

It's true that you can make general statements in a statement of claim, but it is not true that you can "say anything". If you make a statement that you can't support with evidence, and particularly a statement that is key to your claim, you will be in violation of the rules and risk undermining your entire claim.

In fairness, Ruddy was part of the team that built Lansdowne, a very similar project, albeit on a smaller scale.

Also, Houston's arena is only 7 years newer than the CTC.