‘We need to finish what we started’: OSEG and city press ahead with $419M Lansdowne project

Lansdowne 2.0
A render of the proposed retail podium and mixed-use towers in the updated Lansdowne 2.0 proposal. (Supplied)

While the redesigned proposal for Lansdowne 2.0 cuts back on density, it doesn’t do the same on cost, with a price tag that has now risen by $87.5 million.

On Friday, the city, along with the Ottawa Sports and Entertainment Group (OSEG), released an executive summary of an updated proposal for Lansdowne 2.0, which is set to be released in full and put before committees and city council in November.

Released in its original form last May, the proposal includes plans to tear down and replace the northside stands at TD Place Arena, build mixed-use towers that include residential units, and construct a 5,500-seat event centre east of the stadium.

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According to Mayor Mark Sutcliffe, significant changes have been made to address concerns raised in public consultations over the past year. The revised proposal also takes into account feedback and recommendations from Ernst & Young, which was hired to conduct a due diligence review of the financial aspects of the proposal.

“(Lansdowne) is a community gathering place; it’s an important community asset,” said Sutcliffe. “Despite the successes at Lansdowne Park, there is still much work to do. We need to continue to invest in Lansdowne. We can’t repeat the mistakes of the past and let parts of Lansdowne Park dwindle and crumble.”

While several cuts have been made to the original plan, the cost of the project has increased to $419.5 million, compared to the original estimate of $332 million.

Sutcliffe stressed that the city will incur costs on Lansdowne, regardless of whether the proposal is approved.

“This plan will make the financial model for Lansdowne and for the partnership we have with (OSEG) more sustainable, realistic and responsible. Most of the time, when we invest in community infrastructure, we don’t generate a revenue stream to offset some of the costs,” he said.

“If we don’t move forward with this plan, the cost of maintaining the arena and the northside stands will continue to grow, the energy costs will continue to escalate, these facilities will continue to age and be inaccessible to many of our residents. The financial model will become unsustainable.”

The updated proposal includes plans to build two mixed-use towers, reduced from the three towers proposed in the original May 2022 concept.

The towers, which will be tendered by the city to potential developers, would include residential units, with the possibility of hotel rooms.

The change significantly cuts back on housing, with a maximum of 770 residential units, compared with 1,200 units originally. The towers would be 40 and 25 storeys respectively. The number of residential parking spaces has also been reduced by more than half to 336 spots.

The revamped proposal opens up 27,900 square feet for new public realm space, which was not included in the original proposal.

“This significantly reduces density on the site,” said Sutcliffe. “It makes sure the new development doesn’t overshadow Aberdeen (Pavilion) and it also opens up a significant amount of public space.”

While plans for the event centre are relatively unchanged, the cost to build it has increased from $183.5 million to $249.6 million.

The update scraps plans to build a green canopy roof, but otherwise retains the goals of improving accessibility, reducing the environmental impacts of the operation, and integrating into the adjoining Great Lawn.

The event centre and stadium will house the Ottawa Redblacks football club, the Atletico Ottawa professional soccer team, and the city’s incoming Professional Women’s Hockey League team.

New retail space has also been significantly reduced. The original plan proposed adding 108,000 square feet of retail space to the site, which has now been cut to 49,000 square feet.

According to Isabelle Jasmin, the city’s deputy treasurer corporate finances, Lansdowne 2.0 is not revenue-neutral. Increased costs are primarily attributed to market conditions and ongoing supply chain disruptions, as well as increased construction material and labour costs. Still, she said the business case for the project is positive.

“We are essentially gaining the value of a $419-million asset for only $5 million in debt servicing cost investment from the city,” she said. “In other words, it is a redevelopment that gives us the opportunity to replace a 56-year-old facility for a minimal net cost to the city.”

For OSEG, the amount it has invested in the site has increased dramatically for little return as yet.

Jasmin added that costs are incurred by the partnership between the city and OSEG. No money is paid out to either party unless there are net positive cash flows, which there haven’t been since Lansdowne 1.0.

According to Jasmin, OSEG has funded the site’s negative cash flows since 2012, “to the tune of $160 million, including construction costs. They were only expected to fund $55 million. They invested $160 million to get $14 million 40 years from now. That is a return of less than one per cent when they were expecting eight per cent.”

Still, OSEG president and CEO Mark Goudie said the updated plan is the way forward.

“What we need to be able to do is attract more events to Lansdowne and have a facility that people want to come to,” he said. “We’ve got people we’ve worked with that said we can’t keep coming back to this facility . . . They love the (Lansdowne) Market, they love the location. The only concern they had was the state of the arena.”

He added, “I’m proud of what we’ve been able to accomplish with our city partners so far with Lansdowne. Over the past decade, Lansdowne has once again become Ottawa’s gathering place. But we need to finish what we started.”

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