Replacement of the Arena and North Side stands

When was the decision initially made to move forward with the replacement of the arena and north side stands?
In July 2021, Ottawa City Council voted unanimously to replace the Arena and North Side Stands.
What were the options offered to councillors at this time?
The city staff report explored three options in July 2021:
• Status Quo: Continue to Operate and Maintain the Existing Stadium and Arena to the End of the Partnership;
• Renewal: Make significant new investments to upgrade the existing facilities; and
• Replace the facilities with new, contemporary facilities
What was the decision to replace the Arena and North Stands based on?
The reports that accompanied the July 2021 Council Report included the 2018 Feasibility of Possible Redevelopment Report by Leibe Engineering; the 2019 TD Place Functional Obsolescence Report by Rosetti; and the City report on the Lansdowne Park Partnership: Path to Sustainability and Next Steps. The conclusion of the City report (based on evidence including the Liebe and Rosetti reports) was that the arena and stands required replacement.
What does functional obsolescence mean?
Functional obsolescence refers to the reduction of an object’s usefulness or desirability because of outdated design features that cannot be easily modified. For the arena, obsolescence refers to physical life deterioration, wear and tear, beyond inefficient functionality and technological deficiencies. It further defines obsolescence as either curable or incurable. Curable obsolescence can be counteracted by maintenance or repair whereas incurable obsolescence refers to a situation where financially inappropriate change would be required to remediate, ones that are difficult to execute, limited by the drastic physical changes needed.
What about the report that says that the arena and stands are still good for 40 years and do not require replacement?
Morrison Hershfield undertook several reports on Capital Repair and Replacement in advance of the July 2021 vote, and these were made available to councillors upon request. The latest report done prior to that vote provided a capital repair plan that assumed demolition of the retail, concourse, arena, stands and fields in 2054. The total capital repair that would have been needed for repairs until 2054 totaled $39,933,370 (~$40 million) in 2020 dollars.

None of these planned repairs and replacement would result in improvements to accessibility, however, as they primarily concern repairs to electrical, plumbing, HVAC and lighting systems as well as repairs and replacements related to furnishings, doors, windows and floors.
So, the report that says we need to spend $40 million to repair the Arena and Stands until 2054 assumes that the Arena and stands will be fully replaced at that time? Is this included in the report?
Yes, in the letter to Chris Wynn (Director of Facilities for OSEG) dated February 28, 2020 from Morrison Hershfield Limited, it says (word for word): “ Based on the current schedule of expenditures, the annual contribution required for projected capital and repair expenditures for TD Place and the City portion (46.4%) of the Parking Garage (assuming demolition after the 40th year) is:
• $1,427, 250 per year for years 2020 to 2025
• $1,393,378 per year for years 2026 to 2047
• $100,688 per year for years 2047 to 2054
So, the estimated repairs included the parking garage, so why is the parking garage not included as part of this project and presented separately?
Costs for the new underground parking for the residential towers will be covered through new parking revenue and parking reserves that have no impact on the financing strategy for Lansdowne 2.0.

Finances

Debenture definition: A debenture is a type of debt instrument that is unsecured by collateral. Since debentures have no collateral backing, they rely on the creditworthiness and reputation of the issuer for support.

How much is the Lansdowne 2.0. project going to cost?
As of November 2023, the estimated cost of the project is $419 million. Councillors will be presented with a final tender price in advance of the October 29th, 2025 committee meeting.
I thought that the net cost of the project was estimated at $146.6 million?
Yes, although the total cost of the project has been estimated at $419 million, the project has revenue sources and therefore the total net cost of the project has been estimated at $146.6 million.

Can you explain to me how a $419 million project can be reduced to a $146.6 million net cost, and how are we going to finance this project?
The 2023 estimate anticipated that the $419 million project cost would be covered by the following assumptions:
• The sale of subterranean and property air rights would contribute $39 million to the cost;
• The debenture premium for Lansdowne 1.0 would contribute $33 million;
• An anticipated contribution from upper levels of government would contribute $20 million; and
• $312.7 million would be debt financed, over 40 years at 4.25%. This will total payments of $16.4 million yearly, with expected payments as follows:
o $3.9 million from new tax uplift
o $7.5 million from partnership payments (i.e. surcharge, rent, waterfall distributions)
o $5 million annual contribution from City investment
Can you please explain these revenue sources of $3.9 million and $7.5 million annually that are helping to offset the debt financing and reducing the city contribution to $5 million a year over 40 years?
The funds come from a number of sources that was outlined in the November 2023 financing strategy. These revenue streams are anticipated for 2030 when the residential and hotel properties have been constructed and are operational. Annual funds will come from the following:

a. Residential, Hotel and Commercial Property Tax Uplift ($3.9 million annually)
i. Residential Property Tax Uplift: A total of 750 units was used to estimate property tax uplift (assuming one-third of the units would be condominiums and two-thirds would be rentals) and an estimate for a boutique hotel with approximately 111 units. Staff used 75% of the percentage of the property tax uplift to offset debt servicing in order to have the remaining 25% take into consideration the cost of delivering City services. Residential amounts to $3.3 million annually.

ii. Commercial Property Tax Uplift: The 8000 square feet of added retail space in Lansdowne 2.0 is expected to generate an additional $100,000 annually.

iii. Hotel Property Tax Uplift: The estimated hotel tax or accommodation tax that could be generated from a hotel on this site is $500,000 annually. Note that it has not been confirmed that there will be a hotel on site AND municipal accommodation tax is diverted to Ottawa Tourism presently so an agreement would need to be reached with Ottawa Tourism on these funds.

b. Ticket Surcharge: OSEG will pay the City a guaranteed amount of $300,000 for the first 10 years and then $1.50 for every ticket sold for the REDBLACKS, 67’s, and concerts and events, increased by $0.25 every five years after that. This funding source provides an average of $700,000 annually in payments.

c. Rent: OSEG will pay rent for the stadium and event centre, at $500,000 annually.

d. Waterfall: It is expected that the City will receive $6.3 million annually from the waterfall
distributions. This includes return of equity, return on equity and the City’s residual share of profit.
How can the City budget to have any distributions from the waterfall, given the City hasn’t received any funding from the waterfall under Lansdowne 1.0?
As a result of City Council approving the next steps in the Lansdowne 2.0 project the current partnership agreement and waterfall are being renegotiated. Some of changes include OSEG writing off their $30 million in minimum equity and any accrued interest on that amount and reducing the return on equity interest rate to 5% during construction and then to 0% after construction. These negotiated changes are being made to more fairly balance the risks and rewards of the Partnership between the City and OSEG. This agreement has been adjusted so that the City gets paid at the same time as OSEG, whereas previously they were only paid if profit reached. Going forward, the City is forecasted to receive 53% of the total waterfall distributions. It is important to note that if Lansdowne 2.0 does not go ahead, the City is not expected to receive any waterfall distributions as is the case with the current agreement.

What if the revenues as forecasted under the waterfall agreement don’t materialize? Won’t the taxpayers have to foot the bill?
No, they will not. The city is building the entire debt servicing pressure into the budget, within tax targets. Revenues expected from the waterfall will be additional revenues to offset the debt servicing cost and can be used for other City services.
So, we are using debt to pay for Lansdowne and not paying $419 million upfront?
Correct, a debenture will be issued in 2029 after construction is complete and the debt servicing costs would begin in 2030. The debt will be paid over 40 years.
If there is debt, then there is interest. What is the interest rate and what is the total cost of the project using debt?
Yes, the estimated total new debt that will be issued for this project would be $312.7 million at an estimated annual debt servicing cost of $16.4 million, assuming a 40-year term at 4.25 per cent.

How will this be paid back?
The initial source of funding for the debt servicing requirement will be the City’s tax supported debt servicing budget. Over time this cost will be offset by other sources of funding directly attributable to redevelopment, the sources which are explained above.
Debt should not be used as a financing strategy, why are we using debt?
Long-term debt is an important source of capital financing for the City to be able to grow and maintain its assets in a state of good repair. Provincial legislation limits the use of long-term debt to financing the construction or acquisition of capital assets that have been approved by Council. Using long-term debt conservatively in this way has three main benefits:
– The upfront cost of capital projects is aligned with the useful life of the assets. This improves intergenerational equity by enabling future taxpayers to pay for assets that they benefit from.
– It can advance the timing of capital projects that are needed to maintain or enhance municipal service delivery when internal or external funding is limited.
– Municipalities have access to debenture financing with fixed interest rates for the entire term of the debt. When interest rates are lower than the rate of construction inflation, it actually costs less on a net present value basis to fund a capital project with debt and spend sooner to avoid a higher cost later due to inflation and other risk factors.
How does the Lansdowne project align with provincial legislation direction long-term debt?
The Lansdowne project aligns very well with the policies established by the Fiscal Framework and as stipulated by the Municipal Act:
• Debt to be used only for the purchase, construction, or replacement of assets. The Stadium and Event Centre are capital assets that need to be replaced.
• The term of the debt must be equal or less than the life of the asset. Using the reference of current buildings which have lasted 58 years, this is significantly longer than the contemplated debt term of 40 years.
• Principal and interest for tax supported debt not to exceed 7.5% of the city’s own source revenues. The addition of the Lansdowne 2.0 debt only increases the City’s debt servicing ratio to 4.6% from 4.1% compared to the City’s 7.5% limit.(this was from 2023, and will be updated)
• Additional debt permitted for identifiable legacy projects that benefit multiple generations. Lansdowne is defined as a legacy project.
Is there another example of a project that has used debt as a financing tool?
The Central Library project is also a legacy capital works project financed with debt, and similar to Lansdowne 2.0 it will also have sources of revenue to offset the cost of construction, including surplus land sale and the Library and Archives Canada contribution for their share of the project.

Aren’t we still paying debt on Lansdowne 1.0?
Lansdowne 1.0 debt was issued in 2014 for 40 years to 2054. The annual debt servicing on the Stadium, Arena and parking is $6.9M which is fully funded in our budget and was offset by property tax uplift from all the new retail and the cost avoidance of $3.8M, which is what it used to cost us to run Lansdowne prior to the establishment of the partnership agreement. There is also an additional $1.4M in annual debt servicing for the work done on the Urban Park in 2012-2014.
Haven’t we lost money on Lansdowne 1.0?
No, the City has lost no money on Lansdowne 1.0.

But the City was supposed to make money and didn’t?
Yes, it was anticipated that the City of Ottawa would have had waterfall distributions, however this did not happen, for a variety of factors including COVID-19. However, the City has not lost any money.

So, OSEG has made all the profits?
No, to date, OSEG has not made a profit, which is why the City has not received waterfall distributions. The partnership has not yet been profitable, although OSEG has made significant contributions to it (approximately $137 million).
Have we already spent money on Lansdowne 2.0?
Yes, to date close to $22 million has been spent.

What happens if we cancel the project, will we get the $22 million back? Is this $22 million included in the overall project cost?
No. This money has already been sent, it is now a sunk cost. Yes, it is included in the total project cost.

If councillors vote NO on Lansdowne, is that $22 million excluded from the $419 million available to spend on other projects?
The $22 million no longer exists, it has been spent and no longer exists.
However, there is no $419 million to spend on other projects. Remember that above, most of the revenue that finances Lansdowne 2.0 only exists if the project proceeds. The City’s investment is just 34% of the total value of the project. The remaining 66% is funded by sources of revenue directly attributable to Lansdowne 2.0, such as the tax uplift, the air rights revenue, rent, ticket surcharge, and distributions from the waterfall. If Lansdowne 2.0 is not approved, all these sources of funds are no longer available, and the City will be 100% responsible to pay for the cost of renewing this asset later.
The total amount that the City will spend on Lansdowne, over 40 years, is $146 million- minus the $22 million already spent, equaling $124 million. That is the amount that would be available to be spent on other projects, over 40 years. Also, remember that we still have to repair the arena and north side stands until 2054, and replace them then, so we will need to find money for these things as well.

Why couldn’t we spend the entire $124 million on other things, like we are with Lansdowne 2.0?
We don’t have the $124 million right now, so the City is using debt financing to pay for the project, which will be offset by revenues. City Council has endorsed the use of debt financing for projects that are classified as being “legacy”. Projects of this nature must be “one of a kind”, contribute towards the quality of life in the city and have “multi-generational benefit”. The Lansdowne redevelopment project fits these criteria and therefore can be classified as being “legacy” capital works. Renewing a neighbourhood field house or the Belltown Dome is not a legacy project.

I still don’t understand why we are giving money to OSEG to support their operations?
The City is not giving any money to OSEG. In the July 2021 Council decision the underlying principles clearly state that the City funds will not be used to subsidize any of OSEG’s operations, including the professional sports teams, retail or residential, and including any impacts of construction on those operations. The City is investing in it’s assets, as the City owns the arena and North Side Stands (which as noted above have been declared functionally obsolete).

Why is the City still in business with OSEG? Why can’t we exit the partnership with OSEG?
Since 2012, the City of Ottawa has been in a 30-year partnership (now a 40-year partnership) with the Ottawa Sports and Entertainment Group (OSEG) for the renewal and revitalization of Lansdowne. As per the partnership contract, the cost for the city to exit the partnership agreement that is currently slated to end in 2054 is that the City would have to pay OSEG back all the capital OSEG has invested in the site. As of August 2024, that figure was at least $137 million. Exiting the partnership now would mean a bill for that $137 million (this is a low estimate) and some assets that the previous term of council unanimously agreed were functionally obsolete.
Can the City operate Lansdowne on its own? Could they work with a not-for-profit?
The City does not have the experience and expertise that OSEG does. The City owns Lansdowne and is responsible for ensuring the maintenance of public asset and the programming in City-owned spaces. The City is in a private-public partnership with OSEG where OSEG has a leasehold agreement to operate and maintain the city-owned assets.

Accessibility

What are the challenges for Accessibility in the current arena?
In August 2023, a report was brought to the Accessibility and Advisory Committee on the current accessibility needs and deficiencies in Lansdowne. That report can be found here.
Some of the current faults in the existing facility include:
• An insufficient number and a lack of fair seating options for those with accessibility needs and a lack of ability to improve options for accessible seating in locations due to lack of elevator access to upper levels
• Lack of easily and fully accessible washrooms or any universal washrooms with adult change table meeting today’s codes and accessibility standards that meet the needs of the wider community
• The current stadium support columns pose a hazard to everyone, in particular, people with vision disabilities
• A lack of options for accessible gate entries
• The current concession stands do not meet accessibility standard needs of a range of users, including people using mobility devices, people who are hard of hearing and people with vision loss
• The current locker rooms and referee facilities cannot accommodate Para sports players/officials in sports, such as sledge hockey players/officials, wheelchair basketball, wheelchair curling, etc
• The current press facilities and job opportunities are not accessible
• The current accessible parking can pose challenges, particularly during events
• Directional Tactile Walking Surface Indicators are not serving their original purpose as they are obstructed by patios, street furniture, A-Frame signs, etc.
What do we need improvements to accessibility?
A totally new facility will allow a modern, more comfortable venue to be realized that meets current day accessibility standards, including the Ontario Building Code, the Accessibility for Ontarians with Disabilities Act (2005) and the City’s Accessibility Design Standards. By improving the accessibility of the built environment within the Event Centre and North Side Stands more people with disabilities, and people of all ages, will be able to use these facilities. It is also important we have a City that works for all, including the 27% of people who identify as having a disability.
What are some of the improvements in accessibility that Lansdowne 2.0 will bring?
There are quite a few, as listed below:
a) Seating
• Wide variety and ample number of wheelchair accessible and low mobility seating on each level at comparable prices and sightlines.
• 3% of Event Centre seating will be accessible (over 120 seats)
• 3% of North Side Stands seating will be accessible (over 300 seats)
• Adaptable seating located in aisle seats with folding or retractable armrests for ease of access for individuals with mobility issues
• Accessible press facilities

b) Athlete Facilities
• Accessible facilities for athletes (para sports) and referees

c) Assisted Listening Devices
• Assisted Listening Devices will be available at Guest Services and are complimentary.

d) Interpreting Services
• Guests may request an interpreter by contacting Guest Services.

e) Service Animals
• Trained service animals will be welcome (e.g. seeing eye dogs, hearing ear dogs, PTSD companion dogs, seizure alert dogs, Autism/ADHD companion dogs)

f) Wheelchair Assistance
• Guests who require additional assistance because of a limitation in mobility can request the use of a wheelchair to help with transport from the entry doors to their seating location.

g) Concession Stands & Special Dietary Foods
• Concession stands will be accessible to guests with disabilities, with lower accessible counter service, and assistive listening systems for people who are hard of hearing.
• Event Centre and North Side Stands will offer a wide variety of food and beverages throughout the venue, including gluten free, vegetarian, and vegan options. Best efforts will be made to accommodate Guests requiring specific/special dietary needs.
• Information booth and food and beverage concessions have a lowered counter for accessibility purposes

h) Drop Off Locations
• Guests needing special assistance may drop off adjacent to the Event Centre and North Side Stands

i) Elevators
• Three (3) passenger elevators will be available for our guests with disabilities within the Event Centre
• All gates at the North Side Stands will have an adjacent accessible route to the concourse level

j) Entry
• The doors at the main entry will be accessible to our guests with disabilities. When areas around the Event Centre and North Side Stands are closed to vehicles, accessible shuttles will be available

k) Sensory Rooms
• Sensory Rooms with sensory and emotional regulation tools will be available to individuals living with Autism, ADHD, anxiety, PTSD and other similar conditions to promote a positive experience for all guests with sensory issue

l) Washrooms
• Multiple Accessible Family washrooms (Event Centre and North Side Stands)
• Multiple Universal Washrooms equipped with a height adjustable adult change table (Event Centre and North Side Stands)
• Two (2) multi-user All Access (gender neutral) washrooms, a Sensory room, and an infant feeding Pod (Event Centre and North Side Stands)

m) Design for the Deaf
• This includes more space with proper lighting to accommodate people who use ALS/LSQ or read lips, maximization of visual reach, colours that contrast with skin tones, low reflectivity finishes to reduce glare, acoustically absorptive surfaces to reduce reflections, quiet building systems, etc.

n) Communication
• A clear system of communication including braille signage, maps, auditory beacons, wayfinding apps, clear pathways, contrasting colours and minimizing echoes.

Design of Site

How will the ecological and environmental impacts be mitigated?
Mitigation will be done through the demolition contract where the contractor will be recycling materials, such as metal.
Why does the arena have to move? Can’t it be built in the same spot?
The arena must move to make the partnership between the City and OSEG viable. To accomplish this, the arena is moving to make additional space for the two condo buildings that will sit on top of retail space and help the City meet their housing targets.
Is it true that we are losing trees for this project?
There will be one to one replacement for tree planting for this project, so all trees will be replaced. In addition, there will be off-site tree planting on NCC property, working collaboratively with the NCC.
It is true that we are losing the green berm?
The berm will be re-built around the new Event Centre, allowing a gathering space for visitors and residents of the site. The park will continue to serve the needs of the growing community, and visitors to the site.
Will we still be able to toboggan there?
Yes, the new berm is being designed to accommodate tobogganing in the winter, as well as concert viewing in the summer. The proposed height and slope are comparable, if not higher, than other City of Ottawa sledding hills across the city.
Why is the arena going to be smaller? Why are we reducing seating capacity in the north side stands and arena?
Ottawa is already home to various entertainment and sports venues of varying sizes. Based on market trends and statistical attendance data of other comparable sports venues, the current arena was found to be inefficiently oversized in its general seating capacity.
The proposed 5 850 seat Lansdowne Event Centre would have a functional capacity of 6 300+ (with club and standing room) for hockey, and over 7 000 for music events. This has been deemed an appropriate size for the mid-sized events in the Capital Region, such as OHL and PWHL games, curling, volleyball, and a supplementary stadium for the World Juniors.
For more information, click here and visit sections 3.1: Ottawa Civic Centre Right Sizing and 3.2: Seating.
Why can’t the arena have a green roof?
When considering a green roof as an option in the design of Lansdowne 2.0, City staff estimated it to cost approximately between $4 million and $28 million. It was determined to be too costly and eliminated as a possibility.
Why isn’t there a roof on the North side?
The cost of rebuilding a roof over the north stands would be an additional $13.7 million and is not financially and logistically feasible, based on the designs of the new stands. Every effort is being made to ensure that the design of the north stands is scalable, so that a roof could be added in a future phase, should be that the will of the residents.
Why does the city have to own an arena?
CHL and CFL venues across Canada are predominately municipally owned and municipal responsibilities, unless P3 partners are brought in. Investing in City facilities is an intentional decision to continue with this level of sports and entertainment in Ottawa.
Why do we need to add more residential towers to the site?
Ottawa is in a housing crisis, which was declared an emergency by City Council in January 2020. These residential towers will additionally add to the funding of Lansdowne 2.0 in new revenue sources. This includes the sale of air rights to build the towers, a portion of the property taxes from homes in the towers, rent from stadium occupants, and a greater share of the profits coming to the City from the venue. All this will account for 65 cents of every dollar spent on the project.
Why can’t the residential be affordable housing?
The decision to take 25 per cent of the property air rights value and direct it into the City’s affordable housing reserve rather than building 25 per cent affordable housing on the site is based on feedback and analysis from developers as part of the Request for Expression of Interest in the air rights process, it became clear that this site is expensive to build on due to its location and the complexity of ongoing operations. It was determined that it would be too expensive to build “deeply” affordable housing on the site.
So, if we don’t go ahead with Lansdowne 2.0, there will still be almost $10 million going to affordable housing?
No, the money will only go into the Affordable Housing fund if the project goes through as it is dependent on the sale of the air rights.

We really want affordable housing in the Glebe though. There is no guarantee that the contribution that is being made will go into the Glebe.
While there is no guarantee that it will go to the Glebe, there are a number of Glebe based projects in the affordable housing pipeline that was presented as part of the 2024 Affordable Housing Capital Strategy and Update in November 2024. These include 816 Bank Street and 574 Bank Street. Given the number of initiatives underway presently, it is hoped that additional projects with different types of housing, including supportive housing, will be offered in the Glebe. The contribution from the air rights will support these initiatives.

Marty Carr, CouncillorWard 18 Alta Vista

Marty Carr, Councillor
Ward 18 Alta Vista