Bizarre assumptions and legerdemain

In my previous posting, I indicated that I could not understand why the City of Ottawa and its taxpayers are to be treated so shabbily in the proposed Lansdowne Partnership. To conceal the imbalance in the financial arrangements, residents are treated to blue-ribbon sleight of hand.


--- Understate the cost to the City
The first light-fingered move is minimize the City's gross contribution to the project. Here are the methods I have detected so far.


The City's assets (land, buildings and other physical assets such as utility connections) are assigned no value whatever but are turned over to the partnership for 30 -50- 70 years. The cost of moving the SuperEx from Lansdowne to Albion Road is considered only in passing (I seem to recall an estimate of 7 million dollars in cost to the City). Then there is the cost associated with moving the trade fair exhibition space out of Lansdowne; does this involve a cost to the City?


--- Questionable sources of funds
In addition to borrowing 116.9 million dollars to put into the project, the City proposes to dip into "parking reserves" for 4 million dollars. How were these reserves accumulated? If merchants have paid cash-in-lieu of parking into this fund, they may resent having paid for a parking garage for the retail competitors.

But one of the most audacious claims is that 8.4 million dollars in costs to the City will be avoided between 2010 and 2012. City budgets have not included generous provision for maintenance of Lansdowne Park, so there is no validity to the claim that the money will be saved by approving the proposed partnership agreement.

The fact is that the proposed partnership calls for the City to hand Lansdowne Park to OSEG on a silver platter. That platter consists of 129.3 million dollars in cash, plus asssuming unidentified costs for the SuperEx and for trade show facilities.

--- Overstate revenue for the City
To make the deal look better, it is suggested that the City will receive property tax and avoid ongoing costs. These are described as positive cash flows over the period of the partnership.


The costs to the City which are supposedly avoided are bogus. The City has not spent such money in the past and there is no reason to imagine such sums would be spent in the future.


But the big distortion is the idea that property taxes paid on the development at Lansdowne pay off the significant investment the City is expected to make in the project. This is such a distortion of logic that it warrants a detailed explanation in my next posting.

To summarize, the partnership proposal as presented understates the cost to the taxpayers and overstates the anticipated flow of funds to the City.