Lansdowne Park analysis by the city suggests how it can afford a new $330M project
The Ottawa Sports and Entertainment Group has released its proposal to build a new event centre arena and north-side stadium stands, along with 1,200 new residential units in towers.
Jon Willing, Ottawa Citizen
Apr 28, 2022 • 12 hours ago • 4 minute read
The Lansdowne Park 2.0 proposal might make taxpayers do a double-take, considering all the details the city has provided in an analysis of another major redevelopment project.
After the Ottawa Sports and Entertainment Group released its proposal to build a new event centre arena and north-side stadium stands, along with the addition of 1,200 residential units in towers, the city on Wednesday night released its recommendations to council in a lengthy report that will be considered by the finance and economic development committee on May 6.
Here’s what stands out.
The money
The financial analysis is packed with assumptions underpinning the city’s affordability argument.
The city has established a rule that the next phase of redevelopment needs to pay for itself; in other words, the project alone can’t impact the taxes of property owners.
The city estimates construction will be $332.6 million.
Of that, the city would need to borrow $239 million, with future property taxes from the site, revenue from event ticket surcharges (at least $800,000 annually, the city says) and distributions from the Lansdowne agreement’s restructured financial scheme used to pay off the loan.
The total expected debt servicing cost is $13.8 million annually over 40 years.
Some major tweaks to the financial “waterfall” scheme will help the city afford it, the report says.
The waterfall sets out the priorities for distributing net cash flows to OSEG and the city.
In recent years, the city hasn’t been expecting to get anything because the waterfall allows OSEG’s equity to be returned first, and OSEG has been writing more and more cheques for the partnership. OSEG has paid $160 million for the Lansdowne project, $100 million more than it expected in 2012.
The city is proposing to change the waterfall so it receives cash distributions much earlier — after all, the city will need the money to pay for the Lansdowne 2.0 construction.
The city also wants council to approve another extension to the Lansdowne agreement with OSEG, this time by 12 years to Dec. 31, 2066.
The towers
The city figures the air rights in the area eyed for the residential towers are worth $43.5 million, based on 850,000 square feet of residential space.
However, the city won’t know how much developers are willing to pay until it takes bids on the air rights.
There’s also one important caveat included in the report. The water infrastructure can handle the redevelopment, “however, there are some limitations to the wastewater and stormwater capacity that could impact the air rights,” the report says.
The city will need to get planning approvals from council. A settlement with the community in 2011 to avoid a land-use appeal hearing meant the maximum number of homes at Lansdowne was set at 280. There will also be changes required to the land rules to allow more high rises.
Whoever buys the air rights will need to make sure 10 per cent of the units are “affordable,” which means the monthly rent can’t exceed Ottawa’s average market rent by unit type. The average is determined by the Canada Mortgage and Housing Corp., the report says.
The park of Lansdowne Park
The city knows it needs to improve the urban park — that is, the heritage buildings, great lawn and gardens — but it’s not proposing changes yet. Instead, the city says it needs a master plan that sets aside capital funding for the projects. It will also require landscape architects.
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The city says it should contribute between $1 million and $2 million each year for the next 10 years to a capital fund for the public realm of Lansdowne.
The report includes a list of 26 ideas that could cost $3.48 million. The ideas include more shade and outdoor seating, a grander entrance off Queen Elizabeth Driveway, more washrooms and a new play area.
The city is exploring if it should install climate control features in the Horticulture Building and the Aberdeen Pavilion.
When it comes to Aberdeen, the big knock against historic “Cattle Castle” is that it’s virtually unusable in extreme temperatures.
The first priority is protecting the structure. Repairing or replacing the leaky roof of the Aberdeen Pavilion is expected to cost more than the $6 million identified in future budgets, the report says.
Forever banning cars from Aberdeen Square, the area north of Aberdeen Pavilion, appears out of the question. The city says businesses need access for deliveries, but it’s looking into improvements for when it can close the area for special events.
The city has also identified $3.1 million in “connectivity” improvements for cyclists and pedestrians. The ideas will be open to consultation.
The timelines
OSEG has an “overly optimistic” timeline of beginning construction of a new event centre arena by November 2022, the report says.
In the city’s eyes, there are just too many approvals to nail down on the next phase of redevelopment at Lansdowne Park before shovels can go into the ground.
Council will need to approve rezoning and site plan applications, sell the air rights for the proposed residential towers, endorse new agreements with OSEG and receive updated project costs.
Plus, the plan requires public consultation.
The “best case” schedule would be starting a 23-month construction period in summer 2023, the report says. The north-side stands phase would likely start in summer 2025, instead of OSEG’s projection of December 2024.
jwilling@postmedia.com
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