Lansdowne Live: Some Taxpayers' Financial Considerations
A bad deal for Ottawa’s taxpayers. A great deal for OSEG, the developers.
Stadiums are financial drains for taxpayers.
Shopping centres on free public land are financial bonanzas for developers.
City spends $130 million or more for new stadium, parking and some greening.
City borrows $117 million and repays $285 million over 40 years ($7.1 m annually).
No federal or provincial money for stadium or project – highly unusual.
No developers’ money in the stadium.
No mass transit. Grossly insufficient parking.
City gives away 10 acres of prime public land for $1 year for 30 years to OSEG for:
shopping mall; Cineplex; office block; 200 condos; hotel; art gallery? Value of land deemed $20 million but probably worth far more, e.g., $40 m.
Shopping mall on free land provides highly unfair competition to local businesses.
OSEG, the developers, are seeking 30 year exclusive management control over the entire park in addition to construction oversight. OSEG will earn considerable management fees in addition to other revenues. OSEG owns the football and hockey franchises and will lease city facilities at low rental rates.
The proposed financial partnership and “waterfall” is complex and opaque. Financial data to date are inadequate, lacking or nonexistent.
The developers proposed to withdraw their equity of $20 million far ahead of the city
Taxpayers assume most of the risk as taxpayers will provide a costly, luxury stadium to the developers’ sports teams in addition to free land and all municipal services.
CFL football has failed twice in Ottawa in recent years. This greatly increases taxpayers’ financial risk in this deal.
Council did not consider seriously less costly options: e.g. stadium and arena could be fixed up for just $40 million over 10 years which would extend the facility for 30 years.
The deal has been presented as if 75% of the new taxes on the commercial complex will repay most of the city’s debt. This is a gross distortion. Property taxes pay for municipal services like fire, police, paramedics, etc. If 75% of taxes are diverted, taxpayers’ city-wide will end up paying for the municipal services to the new development.
The Memorandum of Understanding with the City does not provide any guarantee that the football and hockey franchises remain in Ottawa.
There has been no competitive bidding for the overall proposal which has been sole-sourced. Taxpayers generally pay more when there are no competitive bids.
The city’s debt will increase dramatically in the next few years. It will borrow money for: new buses ($155 million); sewage treatment ($240 m); light rail (a $2.1 billion investment); new trade and exhibition centre (? m); new location for the Ottawa SuperEx (? m).
Overall, the city has negotiated a very poor deal on behalf of taxpayers.