Settlement between city, OSEG over $24M repairs passes committee

Settling a $24-million dispute over Lansdowne arena repairs is far better than going to costly arbitration, agree councillors on Ottawa's finance and economic development committee and the Ottawa Sport and Entertainment Group.

• Ottawa looking to settle $23M dispute over Lansdowne construction costs
• City, OSEG at odds over added Lansdowne costs

The committee voted in favour of the settlement at its meeting today but it still needs full council approval.

The bulk of the dispute relates to OSEG spending about $23 million to fix corroded steel in the former Ottawa Civic Centre when it was redeveloping TD Place at Lansdowne. The other $1 million was for additional pavers, bollards and asphalt.

The problem was due to black waterproofing on the ceiling of the former arena that was acting like a sponge, said Roger Greenberg. Until an installer working for OSEG went in to hook up rigging, nobody knew it was causing the steel beams to rust, he said. 

Greenberg told councillors he "shudders to think" what might have happened had the rust not been discovered.

"I don't want to be dramatic but we could have had another Elliot Lake on our hands, which would have been catastrophic for the city," Greenberg told reporters, referring to the collapse of a mall in the Northern Ontario town in 2012, in which two women were killed.

Settlement would involve 20-year loan from city

Settling the matter would involve OSEG taking out a a 20-year loan with the City of Ottawa, acting as guarantor. The disputed $24 million would then become debt, rather than equity, on which OSEG can receive 8-per-cent interest.

Because the costs would be paid out of revenue from the Lansdowne Partnership, the costs of fixing the roof would mean the city would no longer see any money flow from the 30-year agreement, which began in 2012.

City staff advised that settling and backing OSEG's loan was preferable even to winning at arbitration.

"The chances of them defaulting on it are much, much smaller on it, than the chances of us losing at arbitration," said city manager Kent Kirkpatrick.

Ottawa's finance and economic development committee also received an update Tuesday on the first year of operation of the redeveloped Lansdowne:

• OSEG said it exceeded its transit targets: 37 per cent of people took transit to Redblacks games rather than the 20 per cent anticipated.
• Roger Greenberg of OSEG said its office tower was only 20-per-cent occupied, in part because of the market in Ottawa.
• City staff said it would do more work on the water plaza to make it more enjoyable and safer, and would also work with the Ottawa Farmers' Market.
• The deputy treasurer said the city is currently raising $2.7 million annually on property taxes from Lansdowne.
• In the retail section, 367 people are working full-time and 680 part-time. For OSEG, there are 286 full-time staff and 1,599 part-time staff.