On Nov. 12 I appeared before the Committee of the Whole and delivered the following speech.
Quote
In my view, the appropriate decision is to "press the reset button". I urge you to end this process now and stop wasting resources on a faulty approach. I am not challenging the assertion that you have been acting legally. I expect you to avoid illegality; I hope that you seek to make wise decisions.
So I have written my remarks with the objective of contributing to your debate. Feel free to steal any ideas you like.
Back on April 22, Council authorized negotiations with Ottawa Sports and Entertainment Group. You provided an impossibly weak negotiating position to the City team involved in the process.
As far as I can see, Council’s instructions were – come back with a deal, any kind of deal. You did not put the City negotiating team in a position in which they could walk away from the table. Such negotiations result in one-sided arrangements.
And now that the outcome of the negotiations is before you, here are some pointed questions I urge you to address in your debate.
Why should taxpayers stump up $110 million for upgrading the stadium and arena? The correspondence from the Canadian Football League does not call for luxury. The documentation before you does call for some work on the facilities. It notes that strengthening of the raker beam is required to end temporary loading restrictions, but with those restrictions the stadium can be used. It calls for cleaning and painting the stadium roof and addressing the problem of water infiltration. The documents do not specify the need for comfy new seats or crystal chandeliers in the VIP boxes. And it is not just a question of inflating the cost of the upgrades, this also delays until 2013 the possibility of having a football (or soccer) team on the field generating revenue.
Why should taxpayers provide $19.3 million for parking? None of this parking is for the stadium or civic centre. Those parking requirements are fully grandfathered – what ever that is supposed to mean. No, the parking paid for by the city is for the customers coming to the shopping centre and cinema. I expect that small business owners who are forced to satisfy the zoning by-law’s onerous demands for parking might question why their competitors receive this kind assistance.
And if the parking requirements for the stadium and civic centre can be grandfathered because those facilities exist today, why could the same not be done for the trade and consumer show industry?
Consider the fundamentals. In a risky business venture, a prudent businessman will attempt to limit his financial exposure by minimizing the investment up front. In the Lansdowne Partnership, the investment in upgrading the stadium is the most risky part of the project. That is paid 100% by the taxpayers but we have seen no real analysis to reduce this up-front investment.
Now some people consider that the project at Lansdowne is "revenue neutral" and will not cost a penny. I submit more of our citizens believe in the tooth fairy than in the fiction of "revenue neutrality".
For decades Council has consistently failed to adequately provide for upkeep at Lansdowne but now your solemn pledge to do so in the future is bankable? Not at my bank!
Moreover you are contemplating a new policy in which property taxes can be designated to support specific city undertakings. Please do not take this path. If you truly believe that taxpayers’ money should go into rehabilitating Lansdowne, say so. Do not hide behind this Enron-style accounting sleight-of -hand.
Finally, the only financial return to the city from this partnership comes from net cash flow dribbling down through the famous "waterfall". Note that the Auditor-General has pointed out that there is no definition of "net cash flow". It is whatever is left over after OSEG has been fully reimbursed for its management, coordination and other services (of which I am sure there will be many).
In conclusion, it is time to abandon the Lansdowne Live detour. We have wasted eighteen months on this fruitless exercise. Get back on track by making decisions about what is to be done and how it will be funded. Take more than a passing interest in the financial impact on the taxpayer. Put to rest ideas of inventing new ways of cooking the books. Secure good value for the tax dollar. Press the reset button!
Unquote
I guess my delivery (by which I managed to fit all this into five minutes -- not easy -- try reading it outloud with a stopwatch) was a bit vigorous. At any rate, Dave Reevely, writing in his blog "Greater Ottawa" described it as "virulent". Well I probably should be happy that he saved "violent", "vituperative", "vitriolic", "voluble", "virus-spreading" and "vulgarizing" for another day. However I wouldn't have minded "vulpine".....
Sunday, November 15, 2009
Tuesday, November 3, 2009
Councillor Chiarelli and innovative accounting
In todays "Metro" Councillor Rick Chiarelli is quoted as saying that Ottawa has three possible choices with respect to the redevelopment of Lansdowne Park. He defines the choices as:
1. buy into the Lansdowne Live proposal by OSEG
2. let the stadium rot and spend $4 million per year for the arena and salons
3. tear down the stadium and civic centre and install a lawn for $40 million with the option to build a stadium elsewhere for $200 million.
The Councillor then argues that going with the OSEG proposal will cost nothing because the debt will be paid by a portion of the city's revenue from the commercial development in the proposed partnership.
In fact there are many other possibilities than those suggested by the Councillor. Moreover the way that the financial arrangements have been described is simply incorrect.
First consider other possibilities.
Instead of maximizing the investment in the stadium, exposing the greatest investment to a risky proposition, it would be possible to address the real safety issues of the stadium and civic centre for a smaller amount of money, do appropriate minor renovations and get a team on the field quickly. With less investment at stake, it would be possible to see whether pro football succeeds, and if the transport and other problems associated with the use of the stadium can be resolved. Assuming football is a success and the transportation issues are overcome, we could then go on to undertake a series of upgrades of the stadium (and civic centre).
Another possibility would be that we do the minimal work on the stadium to get a team on the field and we discover that the transportation issues really are serious. Because we have not invested such a great sum in Lansdowne, it would then be possible to consider a stadium at another location.
Obviously there are many other alternative ways of redeveloping Lansdowne Park, including selling part of the property, rather than engaging in the complex lease arrangement for 30-50-70 years.
Turning to the discussion of financing, it is here that we discover that Councillor Chiarelli is totally out of his depth.
Even if you accept the dubious proposition of dedicating property tax revenue from the commercial development to carry the cost of the debt incurred in upgrading the stadium and civic centre, the Councillor still does not have it right.
We are told that the proposal involves the City taking on debt to be retired over a 40 year amortization. The annual cost of that debt is said to be $7.1 million. The principal source of funds for the $7.1 million is not from the shopping centre's property taxes but rather the $3.8 million in maintenance which the City would need to spend to continue the present programme activity at Lansdowne. This is the $4 million to which the Councillor refers in the article. Yes we have never adequately maintained Lansdowne in the past but it is argued that we will in the future and we are so sincere in our dedication that we can count on saving $3.8 million forever.
So the property taxes to be designated to pay down the debt load borne by the City will only cover a minority of the annual debt servicing cost of the proposal. And here we enter into the whole question of designating property tax revenues. If it can be done for the redevelopment of Lansdowne Park, I would suggest it can be done for anything. I might like marble sidewalks in front of my house -- this will cost nothing because my property taxes can be designated to pay for it. And what does everyone else want to do with their property taxes???
The fact is that Mr. Chiarelli, for reasons that escape me, has become prime cheerleader for the Lansdowne Live proposal from OSEG. He doesn't let reason or logic stand in the way of his advocacy. This is a pity; we expected more from him.
1. buy into the Lansdowne Live proposal by OSEG
2. let the stadium rot and spend $4 million per year for the arena and salons
3. tear down the stadium and civic centre and install a lawn for $40 million with the option to build a stadium elsewhere for $200 million.
The Councillor then argues that going with the OSEG proposal will cost nothing because the debt will be paid by a portion of the city's revenue from the commercial development in the proposed partnership.
In fact there are many other possibilities than those suggested by the Councillor. Moreover the way that the financial arrangements have been described is simply incorrect.
First consider other possibilities.
Instead of maximizing the investment in the stadium, exposing the greatest investment to a risky proposition, it would be possible to address the real safety issues of the stadium and civic centre for a smaller amount of money, do appropriate minor renovations and get a team on the field quickly. With less investment at stake, it would be possible to see whether pro football succeeds, and if the transport and other problems associated with the use of the stadium can be resolved. Assuming football is a success and the transportation issues are overcome, we could then go on to undertake a series of upgrades of the stadium (and civic centre).
Another possibility would be that we do the minimal work on the stadium to get a team on the field and we discover that the transportation issues really are serious. Because we have not invested such a great sum in Lansdowne, it would then be possible to consider a stadium at another location.
Obviously there are many other alternative ways of redeveloping Lansdowne Park, including selling part of the property, rather than engaging in the complex lease arrangement for 30-50-70 years.
Turning to the discussion of financing, it is here that we discover that Councillor Chiarelli is totally out of his depth.
Even if you accept the dubious proposition of dedicating property tax revenue from the commercial development to carry the cost of the debt incurred in upgrading the stadium and civic centre, the Councillor still does not have it right.
We are told that the proposal involves the City taking on debt to be retired over a 40 year amortization. The annual cost of that debt is said to be $7.1 million. The principal source of funds for the $7.1 million is not from the shopping centre's property taxes but rather the $3.8 million in maintenance which the City would need to spend to continue the present programme activity at Lansdowne. This is the $4 million to which the Councillor refers in the article. Yes we have never adequately maintained Lansdowne in the past but it is argued that we will in the future and we are so sincere in our dedication that we can count on saving $3.8 million forever.
So the property taxes to be designated to pay down the debt load borne by the City will only cover a minority of the annual debt servicing cost of the proposal. And here we enter into the whole question of designating property tax revenues. If it can be done for the redevelopment of Lansdowne Park, I would suggest it can be done for anything. I might like marble sidewalks in front of my house -- this will cost nothing because my property taxes can be designated to pay for it. And what does everyone else want to do with their property taxes???
The fact is that Mr. Chiarelli, for reasons that escape me, has become prime cheerleader for the Lansdowne Live proposal from OSEG. He doesn't let reason or logic stand in the way of his advocacy. This is a pity; we expected more from him.
Catching up...part 2
My speech text from October 26 continues...
So that is my abbreviated history of the Lansdowne issue. What does it say to me about the conduct of civic affairs in Ottawa?
My first concern is that we no longer have any idea who is running things at City Hall. Council passed a motion to run a competition. Staff began work on such a project. Then the competition was shut down without reference to Council. The City Manager has since apologized to Council saying that it would have been more appropriate to seek Council’s approval.
When questioned the City Manager says the decision to stop work on the competition was his alone. While I think it very gentlemanly of the City Manager to assume that responsibility, it is widely believed that the Mayor (to whom the City Manager reports) prompted the suspension of the competition process.
Indeed there was an exchange at a Council meeting in which the Councillor for this ward asked "who is running things around here?" and the Mayor responded "I am".
There is some concern that the Mayor is not attuned to the procedures of public administration.
At any rate, whether it is the Mayor’s doing or not, the process under which the Lansdowne project has been advanced has raised many questions.
The normal practice in undertaking a significant capital project would be to issue a Request for Proposals for specific work to be undertaken at City expense. This has not been done.
It has been maintained that the City is in receipt of an unsolicited proposal for redevelopment of Lansdowne Park.
You might question whether this is really unsolicited, considering that the Mayor called for it in public statements, considering the competitive process was suspended in anticipation of a proposal (and that process remained suspended for 3 ½ months awaiting the proposal), and considering that the City held the October 20 proposal until March 6, possibly discussing it with the proponent, before asking that the proposal be made definitive for examination.
The City has a procedure for dealing with unsolicited proposals called the "Ottawa Option" That procedure would lead to a form of competition. That procedure has not been followed.
It is suggested that the Lansdowne project is a public/private partnership (commonly called a P3). The city has a procedure for P3's. That procedure calls for competition among private groups interested in forming a partnership with the City. That procedure is not being followed for the Lansdowne project.
No it seems to me that the City of Ottawa is blithely sailing off into the Twilight Zone. There are no procedures; you can do whatever seems expedient.
I don’t think we have had a meaningful debate on the matter at hand. Considering the money involved, Council debate has been less than satisfying.
Of course I can’t blame the Councillors too much, considering the way they have received the material for debate. Normally Councillors and their staff receive detailed documentation in advance of a meeting of Standing Committee. The public also is given an opportunity to be informed because documentation is posted on the internet for all to read. In the case of the Lansdowne, and the wider stadium discussion involving the Kanata project, the documents were only released as the meeting was underway. In the Glebe Report I criticized some Councillors as Olympic-class speed-readers – they came out in effusive praise of the hundreds of pages of documentation they had received minutes before.
But Council had been asked to decide whether a stadium was a priority. It proved possible to sidestep that question and declare that Lansdowne was the city’s priority stadium proposal. This was a convenient way of avoiding any debate about whether other city activities would be sacrificed to permit investment in a stadium project.
Even if Council had decided that a stadium at Lansdowne was the highest priority for the city, even if we stopped purifying the water, inoculating against the flu, halted transit service and stopped paying the police, it would have been possible to consider whether there are alternatives to the plan presented by the Ottawa Sports and Entertainment Group.
Instead the public discussion in Ottawa has been on the basis of support the Lansdowne Live plan or leave Lansdowne to rot forever.
Even worse, some of the debate has been cast as good citizens of Ottawa versus the selfish inhabitants of the Glebe. The positions of the Glebe Community Association have been distorted. The concerns of the residents living next to the project have been dismissed as illegitimate. Surely it is possible to carry out a discussion about a city issue without getting into a blame game. We have enough divisiveness in this city and should be building bridges rather than emphasizing our differences.
I am concerned that our City which should be acting as a neutral party is deeply engaged in this arrangement. This is not the first time that this has happened. You may recall that the City became a party to the development of land between Kanata and Stittsville. It was in the City’s interest (here I should emphasize short-term interest) to minimize the dangers of flooding and to obscure the possibility that west Kanata development was possible only because of questionable investigation of water levels around the Carp River.
In the much ballyhooed Lansdowne Park Partnership, the City saw itself as a partner, committed to the product of the negotiations held over the summer of 2009.
Finally, I worry about the lack of investigative journalism evident in this matter. Susan Sherring of the Sun has asked sensible questions and Maria Cook of the Citizen has followed up to find out if supposed participants in the partnership have really signed on. The CBC has attempted to remain neutral. But none of the journalists has gone very far in their investigations. I recommended to a reporter from the Citizen that they bring an accounting firm to look at the assumptions in the business plan. Nothing has happened. I guess if I had a business which took out full page ads in the Saturday papers we might get more action.
So in summary my concerns are:
- Is our elected Council running the city or has city staff seized control?
- Do we follow any established procedures in conducting city business or do we do whatever pleases us at the moment?
- Is there some impediment which prevents Council from debating and deciding on meaningful questions?
- Are members of Council being manipulated?
- Is there some reason we fail to consider alternatives to single proposals before us?
- Must the public debate be on a "take it or leave it" basis?
- Do we need to denigrate our fellow citizens to engage in debate?
- Has the City has lost its role of neutrality? Has it become a "partner" incapable of playing a regulatory role?
- Have all our investigative journalists departed the scene, appointed to the Senate or otherwise removed and silenced?
So with all that, over to you. What do you think?
So that is my abbreviated history of the Lansdowne issue. What does it say to me about the conduct of civic affairs in Ottawa?
My first concern is that we no longer have any idea who is running things at City Hall. Council passed a motion to run a competition. Staff began work on such a project. Then the competition was shut down without reference to Council. The City Manager has since apologized to Council saying that it would have been more appropriate to seek Council’s approval.
When questioned the City Manager says the decision to stop work on the competition was his alone. While I think it very gentlemanly of the City Manager to assume that responsibility, it is widely believed that the Mayor (to whom the City Manager reports) prompted the suspension of the competition process.
Indeed there was an exchange at a Council meeting in which the Councillor for this ward asked "who is running things around here?" and the Mayor responded "I am".
There is some concern that the Mayor is not attuned to the procedures of public administration.
At any rate, whether it is the Mayor’s doing or not, the process under which the Lansdowne project has been advanced has raised many questions.
The normal practice in undertaking a significant capital project would be to issue a Request for Proposals for specific work to be undertaken at City expense. This has not been done.
It has been maintained that the City is in receipt of an unsolicited proposal for redevelopment of Lansdowne Park.
You might question whether this is really unsolicited, considering that the Mayor called for it in public statements, considering the competitive process was suspended in anticipation of a proposal (and that process remained suspended for 3 ½ months awaiting the proposal), and considering that the City held the October 20 proposal until March 6, possibly discussing it with the proponent, before asking that the proposal be made definitive for examination.
The City has a procedure for dealing with unsolicited proposals called the "Ottawa Option" That procedure would lead to a form of competition. That procedure has not been followed.
It is suggested that the Lansdowne project is a public/private partnership (commonly called a P3). The city has a procedure for P3's. That procedure calls for competition among private groups interested in forming a partnership with the City. That procedure is not being followed for the Lansdowne project.
No it seems to me that the City of Ottawa is blithely sailing off into the Twilight Zone. There are no procedures; you can do whatever seems expedient.
I don’t think we have had a meaningful debate on the matter at hand. Considering the money involved, Council debate has been less than satisfying.
Of course I can’t blame the Councillors too much, considering the way they have received the material for debate. Normally Councillors and their staff receive detailed documentation in advance of a meeting of Standing Committee. The public also is given an opportunity to be informed because documentation is posted on the internet for all to read. In the case of the Lansdowne, and the wider stadium discussion involving the Kanata project, the documents were only released as the meeting was underway. In the Glebe Report I criticized some Councillors as Olympic-class speed-readers – they came out in effusive praise of the hundreds of pages of documentation they had received minutes before.
But Council had been asked to decide whether a stadium was a priority. It proved possible to sidestep that question and declare that Lansdowne was the city’s priority stadium proposal. This was a convenient way of avoiding any debate about whether other city activities would be sacrificed to permit investment in a stadium project.
Even if Council had decided that a stadium at Lansdowne was the highest priority for the city, even if we stopped purifying the water, inoculating against the flu, halted transit service and stopped paying the police, it would have been possible to consider whether there are alternatives to the plan presented by the Ottawa Sports and Entertainment Group.
Instead the public discussion in Ottawa has been on the basis of support the Lansdowne Live plan or leave Lansdowne to rot forever.
Even worse, some of the debate has been cast as good citizens of Ottawa versus the selfish inhabitants of the Glebe. The positions of the Glebe Community Association have been distorted. The concerns of the residents living next to the project have been dismissed as illegitimate. Surely it is possible to carry out a discussion about a city issue without getting into a blame game. We have enough divisiveness in this city and should be building bridges rather than emphasizing our differences.
I am concerned that our City which should be acting as a neutral party is deeply engaged in this arrangement. This is not the first time that this has happened. You may recall that the City became a party to the development of land between Kanata and Stittsville. It was in the City’s interest (here I should emphasize short-term interest) to minimize the dangers of flooding and to obscure the possibility that west Kanata development was possible only because of questionable investigation of water levels around the Carp River.
In the much ballyhooed Lansdowne Park Partnership, the City saw itself as a partner, committed to the product of the negotiations held over the summer of 2009.
Finally, I worry about the lack of investigative journalism evident in this matter. Susan Sherring of the Sun has asked sensible questions and Maria Cook of the Citizen has followed up to find out if supposed participants in the partnership have really signed on. The CBC has attempted to remain neutral. But none of the journalists has gone very far in their investigations. I recommended to a reporter from the Citizen that they bring an accounting firm to look at the assumptions in the business plan. Nothing has happened. I guess if I had a business which took out full page ads in the Saturday papers we might get more action.
So in summary my concerns are:
- Is our elected Council running the city or has city staff seized control?
- Do we follow any established procedures in conducting city business or do we do whatever pleases us at the moment?
- Is there some impediment which prevents Council from debating and deciding on meaningful questions?
- Are members of Council being manipulated?
- Is there some reason we fail to consider alternatives to single proposals before us?
- Must the public debate be on a "take it or leave it" basis?
- Do we need to denigrate our fellow citizens to engage in debate?
- Has the City has lost its role of neutrality? Has it become a "partner" incapable of playing a regulatory role?
- Have all our investigative journalists departed the scene, appointed to the Senate or otherwise removed and silenced?
So with all that, over to you. What do you think?
Catching up...
It is difficult to keep up a blog and write speeches at the same time. But possibly some readers out in the ether might want to follow some of the remarks I crafted. With that hope in mind, this posting and the following are notes from a speech I delivered on October 26. The first portion deals with the history leading up to the current discussion of Lansdowne Park redevelopment. The second installment is my personal analysis of what the Lansdowne example may show us about the state of civic affairs in Ottawa.
So this is part one...
My purpose today is to bring to your attention some of my concerns about the way our city conducts its affairs. The device I would like to use to get you thinking about such matters is to explore the current controversy surrounding the redevelopment of Lansdowne Park. Using that as an example, I would hope to engage you in a discussion in which you would share your own views on city decision-making.
In case you have been away, or only read the Globe and Mail and no local papers, I had best start by giving you a brief (if that is possible) background on the Lansdowne issue.
Let’s go back to May of 2007. The press reported that an attempt to bring back pro football to Ottawa had been abandoned by a group led by a former Rough Riders player. The Commissioner of the Canadian Football League was quoted as saying that he had not spoken to the Mayor of Ottawa but now that the Palmer-led proposal was off the table, he would do so.
This was followed by the Mayor’s statement that he understood that people with "deep pockets" were looking into bringing pro football back to Ottawa.
In November 2007 council adopted a motion to conduct a design/build competition to plan for redevelopment of Lansdowne Park. Under a program entitled "Design Lansdowne", two well-attended public consultations were conducted by City planning staff in January and February of 2008.
Then in late March it was announced that the CFL had granted a conditional franchise to a group of business people to establish a pro football team in Ottawa.
Spokesmen for the football consortium were asked if they proposed to enter into the competition. They indicated that they had no such intention. When asked if their interest was in land development rather than football, they denied that that was their motivation.
Rumours began to circulate in the city that Frank Clair Stadium was not in good shape. At the same time, activity on the design/develop competition seemed to slacken off.
In mid May 2008 members of City Council were informed that work on the competition had been delayed. For some of us this was a disappointment because we were expecting that the "design brief" for the competition would soon be released. We thought that, after public consideration and council approval, the design brief would serve as the basis for the competition.
In late June 2008 members of City Council were informed that work on the competition had been suspended pending review of a proposal from the football consortium and further investigation of the condition of the stadium and civic centre. It was announced that the lower south side stands of the stadium were to be demolished. Councillors were told that City staff expected a detailed proposal from the football consortium in mid-July.
In fact it was only on October 17 of last year that the football consortium spelled out their ideas. A press conference was held and a proposal entitled "Lansdowne Live" was presented. The Lansdowne Live proposal was not simply about renting the stadium to put on football games, it involved a major rebuilding of the stadium, demolition of several buildings on the site and their replacement by commercial activity, and a tentative proposal for an alternative use of the Aberdeen Pavilion – an aquarium. It was clearly the intention that the consortium take over Lansdowne Park and transform it.
As we went into last winter, word circulated that another group was about to propose a soccer stadium for Kanata. This led to the public debate being reshaped into a contest between two stadium concepts.
Possibly anticipating this stadium discussion, the city had contracted for a study which was called a "needs assessment and location analysis for multi-purpose sport and entertainment facilities". The report looked at what was required to have an outdoor stadium.
The "needs" report was discussed in Council committee in March, and City staff brought forward a procedure for considering the two unsolicited proposals for stadium projects. We learned that the formal name of the Lansdowne Live group was Ottawa Sports and Entertainment Group (OSEG).
On April 6 the staff report on the two competing stadium proposals was released. City staff said that both proposals were acceptable but the Lansdowne project was preferred over the Kanata proposal, because the Lansdowne proposal was judged to offer a better business plan and less risk to the city. But the only insight that public had into the business plan was in the staff report.
On April 20 the staff report on the two unsolicited bids for stadium development was discussed by Council committee. Instead of discussing whether a stadium was a priority for the city, the committee sent other motions forward for Council consideration two days later on April 22.
A motion to go ahead with discussions with the Kanata soccer group was put on hold pending talks about Lansdowne.
Motions to proceed with negotiations on Lansdowne were adopted. Negotiations were proposed to go on for 60 days followed by public consultation prior to a final debate at Council. In fact the negotiations stretched out for more than double that time. The results of the negotiations were released on September 2 and the proposal was billed the Lansdowne Partnership proposal.
Six public events arranged by the City from September 28 through October 6. Many people from the Glebe attended the September 28 event at Lansdowne Salon A. That consisted merely of an opportunity to for residents to wander about and ask questions of various officials and others stationed around the room. Beginning from the third such event on September 30, the events featured a question and answer session in which the City Manager (the head of city staff) answered questions.
It is worth noting that the plan released on September 2 is not identical to that presented in October of last year. There seems to be more commercial development on the site and less provision for amateur sports than in the preliminary plan of a year ago. But the September information package provides more detail on finances and governance proposals.
Central to the "partnership" proposal is a concept which has been titled "revenue neutrality". I believe this concept is faulty but it is important that you understand it because this is the idea which is driving much of the current discussion about making further changes to the September proposal.
Back in April, Council authorized negotiations with OSEG but established several conditions. One condition was that "the City of Ottawa’s contribution to the revitalization of Lansdowne Park be limited to a dollar amount to be established during the negotiations, based on the principle of not increasing the overall cost to the taxpayer".
But you might ask - isn’t it proposed that the City invest a large sum -- $129.3 million to be exact – in this undertaking?
In order to pretend that such investment costs nothing, some very fancy accounting is proposed. First you take money from city parking reserves. Maybe no one will notice. Then you declare that you really, really intend to take good care of Lansdowne in the future. The city has failed to maintain the place in the past, but because you are really, really serious this time, you claim that you will spend millions every year going on into the future. As part of your innovative accounting you count all that money that you promise to spend as if you truly spend it. All that money then is a credit because you won’t in fact need to spend it because you have rebuilt the facilities. Then the best trick of all is that you say that none of the shops or other businesses to be established on the Lansdowne site would otherwise have been created. You convince yourself that the shops and other businesses were created by the City’s investment in the stadium etc, you take most of the property taxes to be paid by those businesses and use that tax revenue to carry the debt load assumed by the City.
This complex and questionable arrangement is the reason that it is said that if the commercial development on the site goes down, the cost to the City goes up.
Some people accept the concept of "revenue neutrality"; some others, when in polite company, have been heard to use the term codswallop.
Another condition applied to the negotiations by Council motion was that "revenues generated from the revitalized Lansdowne Park not be used to subsidize any professional sports teams".
There are many ways in which a subsidy can be granted or can be concealed. One easy way to subsidize is to charge ridiculously low rent. Of course no rent is proposed to be paid to the city for the land under the commercial development, but I would argue that the hockey and football teams are being subsidized in their rent for the stadium and arena.
Am I opposed to a subsidy? Am I opposed to a stadium. Not necessarily, but I would like us to approach issues in a straight forward way, not deceiving ourselves.
Right now various members of city council are in the process of tinkering with the "partnership" proposal. They have not yet received a report on the public open houses. Nor have they a summary of the comments made by the public on the online consultation conducted for the City. Nevertheless bits and pieces of the proposal are being changed in an attempt to concoct an arrangement the public will find more palatable.
...This speech text continues in the following post.
So this is part one...
My purpose today is to bring to your attention some of my concerns about the way our city conducts its affairs. The device I would like to use to get you thinking about such matters is to explore the current controversy surrounding the redevelopment of Lansdowne Park. Using that as an example, I would hope to engage you in a discussion in which you would share your own views on city decision-making.
In case you have been away, or only read the Globe and Mail and no local papers, I had best start by giving you a brief (if that is possible) background on the Lansdowne issue.
Let’s go back to May of 2007. The press reported that an attempt to bring back pro football to Ottawa had been abandoned by a group led by a former Rough Riders player. The Commissioner of the Canadian Football League was quoted as saying that he had not spoken to the Mayor of Ottawa but now that the Palmer-led proposal was off the table, he would do so.
This was followed by the Mayor’s statement that he understood that people with "deep pockets" were looking into bringing pro football back to Ottawa.
In November 2007 council adopted a motion to conduct a design/build competition to plan for redevelopment of Lansdowne Park. Under a program entitled "Design Lansdowne", two well-attended public consultations were conducted by City planning staff in January and February of 2008.
Then in late March it was announced that the CFL had granted a conditional franchise to a group of business people to establish a pro football team in Ottawa.
Spokesmen for the football consortium were asked if they proposed to enter into the competition. They indicated that they had no such intention. When asked if their interest was in land development rather than football, they denied that that was their motivation.
Rumours began to circulate in the city that Frank Clair Stadium was not in good shape. At the same time, activity on the design/develop competition seemed to slacken off.
In mid May 2008 members of City Council were informed that work on the competition had been delayed. For some of us this was a disappointment because we were expecting that the "design brief" for the competition would soon be released. We thought that, after public consideration and council approval, the design brief would serve as the basis for the competition.
In late June 2008 members of City Council were informed that work on the competition had been suspended pending review of a proposal from the football consortium and further investigation of the condition of the stadium and civic centre. It was announced that the lower south side stands of the stadium were to be demolished. Councillors were told that City staff expected a detailed proposal from the football consortium in mid-July.
In fact it was only on October 17 of last year that the football consortium spelled out their ideas. A press conference was held and a proposal entitled "Lansdowne Live" was presented. The Lansdowne Live proposal was not simply about renting the stadium to put on football games, it involved a major rebuilding of the stadium, demolition of several buildings on the site and their replacement by commercial activity, and a tentative proposal for an alternative use of the Aberdeen Pavilion – an aquarium. It was clearly the intention that the consortium take over Lansdowne Park and transform it.
As we went into last winter, word circulated that another group was about to propose a soccer stadium for Kanata. This led to the public debate being reshaped into a contest between two stadium concepts.
Possibly anticipating this stadium discussion, the city had contracted for a study which was called a "needs assessment and location analysis for multi-purpose sport and entertainment facilities". The report looked at what was required to have an outdoor stadium.
The "needs" report was discussed in Council committee in March, and City staff brought forward a procedure for considering the two unsolicited proposals for stadium projects. We learned that the formal name of the Lansdowne Live group was Ottawa Sports and Entertainment Group (OSEG).
On April 6 the staff report on the two competing stadium proposals was released. City staff said that both proposals were acceptable but the Lansdowne project was preferred over the Kanata proposal, because the Lansdowne proposal was judged to offer a better business plan and less risk to the city. But the only insight that public had into the business plan was in the staff report.
On April 20 the staff report on the two unsolicited bids for stadium development was discussed by Council committee. Instead of discussing whether a stadium was a priority for the city, the committee sent other motions forward for Council consideration two days later on April 22.
A motion to go ahead with discussions with the Kanata soccer group was put on hold pending talks about Lansdowne.
Motions to proceed with negotiations on Lansdowne were adopted. Negotiations were proposed to go on for 60 days followed by public consultation prior to a final debate at Council. In fact the negotiations stretched out for more than double that time. The results of the negotiations were released on September 2 and the proposal was billed the Lansdowne Partnership proposal.
Six public events arranged by the City from September 28 through October 6. Many people from the Glebe attended the September 28 event at Lansdowne Salon A. That consisted merely of an opportunity to for residents to wander about and ask questions of various officials and others stationed around the room. Beginning from the third such event on September 30, the events featured a question and answer session in which the City Manager (the head of city staff) answered questions.
It is worth noting that the plan released on September 2 is not identical to that presented in October of last year. There seems to be more commercial development on the site and less provision for amateur sports than in the preliminary plan of a year ago. But the September information package provides more detail on finances and governance proposals.
Central to the "partnership" proposal is a concept which has been titled "revenue neutrality". I believe this concept is faulty but it is important that you understand it because this is the idea which is driving much of the current discussion about making further changes to the September proposal.
Back in April, Council authorized negotiations with OSEG but established several conditions. One condition was that "the City of Ottawa’s contribution to the revitalization of Lansdowne Park be limited to a dollar amount to be established during the negotiations, based on the principle of not increasing the overall cost to the taxpayer".
But you might ask - isn’t it proposed that the City invest a large sum -- $129.3 million to be exact – in this undertaking?
In order to pretend that such investment costs nothing, some very fancy accounting is proposed. First you take money from city parking reserves. Maybe no one will notice. Then you declare that you really, really intend to take good care of Lansdowne in the future. The city has failed to maintain the place in the past, but because you are really, really serious this time, you claim that you will spend millions every year going on into the future. As part of your innovative accounting you count all that money that you promise to spend as if you truly spend it. All that money then is a credit because you won’t in fact need to spend it because you have rebuilt the facilities. Then the best trick of all is that you say that none of the shops or other businesses to be established on the Lansdowne site would otherwise have been created. You convince yourself that the shops and other businesses were created by the City’s investment in the stadium etc, you take most of the property taxes to be paid by those businesses and use that tax revenue to carry the debt load assumed by the City.
This complex and questionable arrangement is the reason that it is said that if the commercial development on the site goes down, the cost to the City goes up.
Some people accept the concept of "revenue neutrality"; some others, when in polite company, have been heard to use the term codswallop.
Another condition applied to the negotiations by Council motion was that "revenues generated from the revitalized Lansdowne Park not be used to subsidize any professional sports teams".
There are many ways in which a subsidy can be granted or can be concealed. One easy way to subsidize is to charge ridiculously low rent. Of course no rent is proposed to be paid to the city for the land under the commercial development, but I would argue that the hockey and football teams are being subsidized in their rent for the stadium and arena.
Am I opposed to a subsidy? Am I opposed to a stadium. Not necessarily, but I would like us to approach issues in a straight forward way, not deceiving ourselves.
Right now various members of city council are in the process of tinkering with the "partnership" proposal. They have not yet received a report on the public open houses. Nor have they a summary of the comments made by the public on the online consultation conducted for the City. Nevertheless bits and pieces of the proposal are being changed in an attempt to concoct an arrangement the public will find more palatable.
...This speech text continues in the following post.
Wednesday, October 14, 2009
Distractions and perplexities
So what is the deal for Lansdowne that is up for discussion anyway?
The media is carrying stories indicating that Councillors are actively working to restructure the great Lansdowne Partnership which was proclaimed with such ballyhoo on September 2. It is surprising that some Councillors who rushed to praise the proposal on the moment of its release (and, in one case, lauded the arrangement prior to seeing it!) are now working to shore up the plan and patch its weak points.
To be fair to OSEG, the private sector players in the deal, they have been consistent in affirming that there is some flexibility to their proposal. However today, Mr. Greenberg, as spokeman for OSEG, indicated that he is coming to the end of his patience. He wants Council to sign on the dotted line in early November, commiting the City to the arrangement.
I suspect that much of the activity by Councillors is in reaction to the possibility that OSEG will walk away. No doubt some Councillors are so closely associated with this plan that they will offer further concessions to OSEG to keep them in the game.
The principals of OSEG say that their interest is in bringing football back to Ottawa. Put aside all the discussion about other matters and talk about what they claim is their objective.
Unfortunately the entire discussion is obscured by the notion of "revenue neutrality". In order to generate tax revenues to pay for the stadium and civic centre renovations, some Councillors are convinced that they need to grant land for a shopping centre, offices, a hotel and residences.
Mr. Greenberg is right when he says that if the shopping centre is reduced in size, tax revenues would be diminished and (using the crackpot accounting favoured by some) the delicate balance of "revenue neutrality" would be disturbed. Mr. Greenberg goes on to say that with a reduced shopping centre, the "gap" in tax revenue could be made up by authorizing offices, a hotel and residential development.
All this discussion is akin to the medieval issue of how many angels could dance on the tip of a pin. The concept of "revenue neutrality" is simply invalid. We should stop talking about a nonsense topic.
The real question which Councillors should be considering is whether they are willing to commit 129.3 million dollars. Any Councillor who votes to support that should explain why that is the most important investment for the City to make -- in particular, why it trumps fixing the sewer system or improving transit. He/she should also explain why such a large investment is required.
If the purpose is to extend the use of the civic centre, they should ask exactly what that would cost. They should eliminate the frills and invest in the basics, if they want to do anything at all. Then they should look at the stadium. If they really want to have a working football/soccer stadium, determine how little could be spent to make it workable. Invest that minimal amount and see if football/soccer is viable. From the revenue generated from the civic centre and stadium make further investments as appropriate.
But this discussion about restoring the civic centre and stadium should be divorced entirely from the concept of "revenue neutrality".
There is no reason to size the commercial development on the site to generate a specific amount of property tax. If there is a market for the commercial enterprises proposed, they will be built somewhere and taxes will be paid.
The media is carrying stories indicating that Councillors are actively working to restructure the great Lansdowne Partnership which was proclaimed with such ballyhoo on September 2. It is surprising that some Councillors who rushed to praise the proposal on the moment of its release (and, in one case, lauded the arrangement prior to seeing it!) are now working to shore up the plan and patch its weak points.
To be fair to OSEG, the private sector players in the deal, they have been consistent in affirming that there is some flexibility to their proposal. However today, Mr. Greenberg, as spokeman for OSEG, indicated that he is coming to the end of his patience. He wants Council to sign on the dotted line in early November, commiting the City to the arrangement.
I suspect that much of the activity by Councillors is in reaction to the possibility that OSEG will walk away. No doubt some Councillors are so closely associated with this plan that they will offer further concessions to OSEG to keep them in the game.
The principals of OSEG say that their interest is in bringing football back to Ottawa. Put aside all the discussion about other matters and talk about what they claim is their objective.
Unfortunately the entire discussion is obscured by the notion of "revenue neutrality". In order to generate tax revenues to pay for the stadium and civic centre renovations, some Councillors are convinced that they need to grant land for a shopping centre, offices, a hotel and residences.
Mr. Greenberg is right when he says that if the shopping centre is reduced in size, tax revenues would be diminished and (using the crackpot accounting favoured by some) the delicate balance of "revenue neutrality" would be disturbed. Mr. Greenberg goes on to say that with a reduced shopping centre, the "gap" in tax revenue could be made up by authorizing offices, a hotel and residential development.
All this discussion is akin to the medieval issue of how many angels could dance on the tip of a pin. The concept of "revenue neutrality" is simply invalid. We should stop talking about a nonsense topic.
The real question which Councillors should be considering is whether they are willing to commit 129.3 million dollars. Any Councillor who votes to support that should explain why that is the most important investment for the City to make -- in particular, why it trumps fixing the sewer system or improving transit. He/she should also explain why such a large investment is required.
If the purpose is to extend the use of the civic centre, they should ask exactly what that would cost. They should eliminate the frills and invest in the basics, if they want to do anything at all. Then they should look at the stadium. If they really want to have a working football/soccer stadium, determine how little could be spent to make it workable. Invest that minimal amount and see if football/soccer is viable. From the revenue generated from the civic centre and stadium make further investments as appropriate.
But this discussion about restoring the civic centre and stadium should be divorced entirely from the concept of "revenue neutrality".
There is no reason to size the commercial development on the site to generate a specific amount of property tax. If there is a market for the commercial enterprises proposed, they will be built somewhere and taxes will be paid.
Wednesday, October 7, 2009
Truth squad let loose
What a pleasure it is to see Roger Greenberg writing in today's Citizen under the headline "Here's the truth about the Lansdowne plan". I guess I should commit to electrons some of my thoughts as I read his article.
Mr. Greenberg begins by writing about the public consultations which he describes as "disrupted (some say hijacked) by an orchestrated campaign of misinformation". I would suggest that the disruption was not affecting a public consultation; it was a brief interjection into a concerted sales campaign. Surely Mr. Greenberg is referring to the use of the megaphone at the event on September 29, a sales pitch for the partnership which was disturbed by calls for members of the crowd to express their views.
He then complains about the "dance of deception" and the "hoedown of hokum" at subsequent events. (This leads me to inquire if Mr. Greenberg has fallen under the evil influence of the ghost writer for the late and unlamented Vice President of the United States, Spiro Agnew, who spoke of the "nattering nabobs of negativism".)
He says some Glebe residents would like to defeat the Lansdowne Live approach in order to see the sports facilities levelled and a real park created in its place. He is right. There are such people in the Glebe. There are also people in the Glebe who want football and who see the complex proposal for the Lansdowne Partnership as unnecessarily delaying and putting into jeopardy the restoration of the stadium and civic centre. Those people are also speaking out and causing angst among the supporters of the OSEG approach.
He says that businesses in the neighbourhood fear competition and want to eliminate the threat. Yes, that is true. There are many who consider that subsidized competition is indeed a threat. The merchants who feel threatened own or rent the land under their shop; they don't get it free under a sweetheart deal. They pay property taxes on the land and on the building that houses their shop. They don't sit on city land which is exempt from tax. Their taxes go into keeping the city running not into subsidizing their landlord's other business interests. Yes, for all those reasons they fear the competition.
And probably the merchants are also a little fearful when they see that a massive rezoning of their neighbourhood is about to take place which will completely change the uses that can be placed on the land. Their fear is that the rezoning is not going to be handled according to normal and proper procedures. Why? Well, nothing else about the Lansdowne project has followed the established procedures, so there is no reason to imagine that due process will prevail in the future.
Then Mr. Greenberg is proud to announce that a mere 13.8 percent of the total surface area of Lansdowne is to be occupied by new commercial development. Of course the figure would change if we removed from the calculation the stadium and civic centre which is to be handed over to OSEG rent-free for 30 years. (Oh sorry, tiny little rents are to be paid by the football and hockey team.) We should also rule out the Aberdeen Pavilion which is to become restaurants -- somehow that is not commercial (but it is again rent-free).
If we are to do comparisons, I wonder what the ratio of buildings to total site is for a power centre like South Keys. I doubt that the buildings cover more than 40% of the total surface area (and do you include the O-Train stations or the bus facilities as part of the site?).
Mr. Greenberg acknowledges that a food store would compete with other stores selling food. I find it hard to see how this admission squares with the argument that the new retail at Lansdowne is unique. I thought the new food store would specialize in the exotic and foods not available elsewhere in Ottawa. Fresh durian and sweetsop was the sort of thing I expected.
The one aspect in which I really do agree with Mr. Greenberg (and this is truly a no-sarcasm break) is that some activity along Bank Street (small shops, cafes etc.) between Holmwood and the bridge over the canal would be desirable. It is boooooooooring to walk along that expanse of Bank Street now.
On parking Mr. Greenberg notes that there is proposed to be ample parking for the customers at the retail shops. He is right. There is also parking for the residents on site, for the office building and the hotel. Oh! We forgot there are also the restaurants in the Aberdeen Pavilion. Oh? We forgot there are also the hockey fans in the civic centre. Oh! We forgot there are also the fans in the football/soccer stadium. Too bad we made no provision for any of them to park.
The City zoning by-law contains provisions for parking. I personally think these aspects of the zoning by-law are useless, but our Council and our City planning experts do not agree. The by-law says you are to have one parking space for each four seats in a stadium and the same for an arena. With 24,000 seats in the stadium and 10,000 seats in the arena , this would indicate that 8,500 parking spaces should be available for these uses.
The Delcan report prepared for OSEG indicates that all of those parking spaces (plus any for the Aberdeen Pavilion or the Horticultural Building) are "grandfathered". I hope your grandfather lives close to Lansdowne so you can park at his house.
Mr. Greenberg indicates that the city has "developed a comprehensive transportation plan" to cope with access to the redeveloped Lansdowne Park. That sweeping statement is hard to reconcile with the much more cautious statements by the City Manager about the need for a real transportation plan to support the Partnership proposal.
But Mr. Greenberg notes that the removal of the Exhibition and the banishment of the trade and consumer show industry will eliminate all sorts of traffic. OK, point taken. But does the elimination of these demands for vehicular access justify cutting the parking on site by half while adding multiple uses which will stimulate demand for parking? (This is a debating point, I really do not want to encourage the expansion of parking, but I question the validity of Mr. Greenberg's argument.)
In the article Mr. Greenberg emphasizes that the City will continue to retain ownership of the land. He says that after 30 years the City's debenture will be largely paid off. This raises an interesting question for me. If a real estate developer has a lease for 30 years (even a lease that produces no rent), is it common to amortize the underlying financing over 40 years? After 30 years, if and when the commercial buildings revert to the City, the City is still paying down the debt for fixing up the stadium & civic centre and building the parking.
But then Mr. Greenberg (maybe inadvertently) hits us with the whopper. He says "the debenture is to be paid back from the annual funds currently allocated for maintenance at Lansdowne ($3.8 million) to continue current programming, supplemented by 75 percent of the municipal tax revenues generated by the new retail development ($3.2 million)."
Surely Mr. Greenberg you don't expect us to fall for that. Council has never adequately funded maintenance of Lansdowne. You cannot sensibly assume that they would fund it in the future -- the $3.8 million does not exist.
Anyway, what is current programming at Lansdowne? Unless this is defined, we do not know what it costs to continue it. Obviously we can let the stadium deteriorate because there is no current programming there. (You do not need thousands of seats to look down on an inflated dome in February.)
As for the idea of dedicating property tax, this is not done and should not be done. If you want to allocate property tax, why don't you reallocate the property tax on the St. Laurent shopping centre to pay down the City's debt? The tax paid will be greater and we don't have to wait for years to start getting the cash.
And I don't care if Mr. Greenberg is tired of Councillor Doucet's complaints about the cancellation of the design/develop competition. Why should the principals of OSEG care? They stated clearly that, if there was to be a competition, they would refuse to compete. I don't think that Councillor Doucet should desist; I think it is up to OSEG to explain why they ran and continue to run away from the idea of competition.
In conclusion, Mr. Greenberg protests "the bogus feedback from the meetings' hijackers". My own view is that it is Mr. Greenberg that "doth protest too much".
Mr. Greenberg begins by writing about the public consultations which he describes as "disrupted (some say hijacked) by an orchestrated campaign of misinformation". I would suggest that the disruption was not affecting a public consultation; it was a brief interjection into a concerted sales campaign. Surely Mr. Greenberg is referring to the use of the megaphone at the event on September 29, a sales pitch for the partnership which was disturbed by calls for members of the crowd to express their views.
He then complains about the "dance of deception" and the "hoedown of hokum" at subsequent events. (This leads me to inquire if Mr. Greenberg has fallen under the evil influence of the ghost writer for the late and unlamented Vice President of the United States, Spiro Agnew, who spoke of the "nattering nabobs of negativism".)
He says some Glebe residents would like to defeat the Lansdowne Live approach in order to see the sports facilities levelled and a real park created in its place. He is right. There are such people in the Glebe. There are also people in the Glebe who want football and who see the complex proposal for the Lansdowne Partnership as unnecessarily delaying and putting into jeopardy the restoration of the stadium and civic centre. Those people are also speaking out and causing angst among the supporters of the OSEG approach.
He says that businesses in the neighbourhood fear competition and want to eliminate the threat. Yes, that is true. There are many who consider that subsidized competition is indeed a threat. The merchants who feel threatened own or rent the land under their shop; they don't get it free under a sweetheart deal. They pay property taxes on the land and on the building that houses their shop. They don't sit on city land which is exempt from tax. Their taxes go into keeping the city running not into subsidizing their landlord's other business interests. Yes, for all those reasons they fear the competition.
And probably the merchants are also a little fearful when they see that a massive rezoning of their neighbourhood is about to take place which will completely change the uses that can be placed on the land. Their fear is that the rezoning is not going to be handled according to normal and proper procedures. Why? Well, nothing else about the Lansdowne project has followed the established procedures, so there is no reason to imagine that due process will prevail in the future.
Then Mr. Greenberg is proud to announce that a mere 13.8 percent of the total surface area of Lansdowne is to be occupied by new commercial development. Of course the figure would change if we removed from the calculation the stadium and civic centre which is to be handed over to OSEG rent-free for 30 years. (Oh sorry, tiny little rents are to be paid by the football and hockey team.) We should also rule out the Aberdeen Pavilion which is to become restaurants -- somehow that is not commercial (but it is again rent-free).
If we are to do comparisons, I wonder what the ratio of buildings to total site is for a power centre like South Keys. I doubt that the buildings cover more than 40% of the total surface area (and do you include the O-Train stations or the bus facilities as part of the site?).
Mr. Greenberg acknowledges that a food store would compete with other stores selling food. I find it hard to see how this admission squares with the argument that the new retail at Lansdowne is unique. I thought the new food store would specialize in the exotic and foods not available elsewhere in Ottawa. Fresh durian and sweetsop was the sort of thing I expected.
The one aspect in which I really do agree with Mr. Greenberg (and this is truly a no-sarcasm break) is that some activity along Bank Street (small shops, cafes etc.) between Holmwood and the bridge over the canal would be desirable. It is boooooooooring to walk along that expanse of Bank Street now.
On parking Mr. Greenberg notes that there is proposed to be ample parking for the customers at the retail shops. He is right. There is also parking for the residents on site, for the office building and the hotel. Oh! We forgot there are also the restaurants in the Aberdeen Pavilion. Oh? We forgot there are also the hockey fans in the civic centre. Oh! We forgot there are also the fans in the football/soccer stadium. Too bad we made no provision for any of them to park.
The City zoning by-law contains provisions for parking. I personally think these aspects of the zoning by-law are useless, but our Council and our City planning experts do not agree. The by-law says you are to have one parking space for each four seats in a stadium and the same for an arena. With 24,000 seats in the stadium and 10,000 seats in the arena , this would indicate that 8,500 parking spaces should be available for these uses.
The Delcan report prepared for OSEG indicates that all of those parking spaces (plus any for the Aberdeen Pavilion or the Horticultural Building) are "grandfathered". I hope your grandfather lives close to Lansdowne so you can park at his house.
Mr. Greenberg indicates that the city has "developed a comprehensive transportation plan" to cope with access to the redeveloped Lansdowne Park. That sweeping statement is hard to reconcile with the much more cautious statements by the City Manager about the need for a real transportation plan to support the Partnership proposal.
But Mr. Greenberg notes that the removal of the Exhibition and the banishment of the trade and consumer show industry will eliminate all sorts of traffic. OK, point taken. But does the elimination of these demands for vehicular access justify cutting the parking on site by half while adding multiple uses which will stimulate demand for parking? (This is a debating point, I really do not want to encourage the expansion of parking, but I question the validity of Mr. Greenberg's argument.)
In the article Mr. Greenberg emphasizes that the City will continue to retain ownership of the land. He says that after 30 years the City's debenture will be largely paid off. This raises an interesting question for me. If a real estate developer has a lease for 30 years (even a lease that produces no rent), is it common to amortize the underlying financing over 40 years? After 30 years, if and when the commercial buildings revert to the City, the City is still paying down the debt for fixing up the stadium & civic centre and building the parking.
But then Mr. Greenberg (maybe inadvertently) hits us with the whopper. He says "the debenture is to be paid back from the annual funds currently allocated for maintenance at Lansdowne ($3.8 million) to continue current programming, supplemented by 75 percent of the municipal tax revenues generated by the new retail development ($3.2 million)."
Surely Mr. Greenberg you don't expect us to fall for that. Council has never adequately funded maintenance of Lansdowne. You cannot sensibly assume that they would fund it in the future -- the $3.8 million does not exist.
Anyway, what is current programming at Lansdowne? Unless this is defined, we do not know what it costs to continue it. Obviously we can let the stadium deteriorate because there is no current programming there. (You do not need thousands of seats to look down on an inflated dome in February.)
As for the idea of dedicating property tax, this is not done and should not be done. If you want to allocate property tax, why don't you reallocate the property tax on the St. Laurent shopping centre to pay down the City's debt? The tax paid will be greater and we don't have to wait for years to start getting the cash.
And I don't care if Mr. Greenberg is tired of Councillor Doucet's complaints about the cancellation of the design/develop competition. Why should the principals of OSEG care? They stated clearly that, if there was to be a competition, they would refuse to compete. I don't think that Councillor Doucet should desist; I think it is up to OSEG to explain why they ran and continue to run away from the idea of competition.
In conclusion, Mr. Greenberg protests "the bogus feedback from the meetings' hijackers". My own view is that it is Mr. Greenberg that "doth protest too much".
Sunday, October 4, 2009
Around and around - a subsidy...
We seem to be lost in a circular debate. Could we all agree that leaving Lansdowne Park in its present state is unacceptable?
If we all agree, the issue is - where do we go from here.
One possibility is to simply buy into the single proposal we are being offered. Put in a deluxe stadium at taxpayers' expense, give away acres of land and hope for the best.
Another approach would be to ask what the people of Ottawa want. Canada 411 indicates that there are 619 shops in Ottawa associated with "sports", only nine associated with "football" and thirty-seven associated with "soccer". Does this mean that there is a severe shortage of shops to cater to the fans of a new CFL team? Is that shortage so severe that the City needs to come to the rescue and address the needs of those consumers by providing rent-free land for such retailers?
I suspect that there are many people who would like to see pro football return to Ottawa. Probably this is less than a majority, but they are numerous. Should they be denied? No, I don't think so. But to what degree should the rest of us, who are not so passionate about football, subsidize the football fans?
There are all sorts of interests in our community. Some people are keen on chamber music; some are partial to capoeira (Brazilian martial arts); others are oenophiles. To my mind, all of these interests, are just as worthy of support as CFL football. All are probably of interest to only a minority.
But no one has suggested that the wine show take over Lansdowne year round to satisfy the oenophiles. For 129 million dollars we could build a world-class collection of wine. Strangely enough, there is no proposal for an Ottawa City wine cellar at Lansdowne Park.
But there is a proposal to take remarkable measures in support of football.
Would the supporters of football be prepared to line up with the rest of the recipients of city subsidies for the yearly begging process at budget time? Why not?
I would like to see the CFL football team appearing with the Barrhaven Highland Dancing Society asking for its annual grant from the city.
Does this solve the question of what to do with Lansdowne Park?
No it does not, but it is a beginning to analyse one small aspect of the debate.
If we all agree, the issue is - where do we go from here.
One possibility is to simply buy into the single proposal we are being offered. Put in a deluxe stadium at taxpayers' expense, give away acres of land and hope for the best.
Another approach would be to ask what the people of Ottawa want. Canada 411 indicates that there are 619 shops in Ottawa associated with "sports", only nine associated with "football" and thirty-seven associated with "soccer". Does this mean that there is a severe shortage of shops to cater to the fans of a new CFL team? Is that shortage so severe that the City needs to come to the rescue and address the needs of those consumers by providing rent-free land for such retailers?
I suspect that there are many people who would like to see pro football return to Ottawa. Probably this is less than a majority, but they are numerous. Should they be denied? No, I don't think so. But to what degree should the rest of us, who are not so passionate about football, subsidize the football fans?
There are all sorts of interests in our community. Some people are keen on chamber music; some are partial to capoeira (Brazilian martial arts); others are oenophiles. To my mind, all of these interests, are just as worthy of support as CFL football. All are probably of interest to only a minority.
But no one has suggested that the wine show take over Lansdowne year round to satisfy the oenophiles. For 129 million dollars we could build a world-class collection of wine. Strangely enough, there is no proposal for an Ottawa City wine cellar at Lansdowne Park.
But there is a proposal to take remarkable measures in support of football.
Would the supporters of football be prepared to line up with the rest of the recipients of city subsidies for the yearly begging process at budget time? Why not?
I would like to see the CFL football team appearing with the Barrhaven Highland Dancing Society asking for its annual grant from the city.
Does this solve the question of what to do with Lansdowne Park?
No it does not, but it is a beginning to analyse one small aspect of the debate.
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