On Tuesday February 7 (yesterday as I write this), a standing-room-only crowd assembled at Ottawa City Hall for a presentation on the Lansdowne redevelopment proposals as revised through deliberations with the Lansdowne Design Review Panel. Apparently some thought that plans for Lansdowne had made great strides through the revision process. The Citizen ran a headline in Wednesday's edition "Modernist vision unveiled for a renovated Lansdowne". [What was the previous design -- baroque?] Metro was less enthusiastic with coverage on page 3 under the lead "City raises curtain on new Lansdowne design plans".
But in reality there was little new in the material released. The location of the various buildings has not changed for over a year. The elimination of the taller buildings along Holmwood Ave. was the product of the negotiated settlement before the Ontario Municipal Board which was completed some 10 months earlier.
The only new development was the decision to slice a chunk off the Horticulture Building prior to moving it eastward to facilitate the digging for the underground parking.
No doubt the the Design Panel had lengthy discussions about design features and quite possibly they did an excellent job in getting improvements in details of the proposal. However it would have been interesting to inform the public as to what those improvements are.
At the briefing everyone congratulated everyone else on the work they had done. But it was not obvious what (apart from the changes for the Horticulture Building) was achieved.
Once again we had new "eye candy" -- pretty pictures presented for the public -- but we were given no idea of the nature of the refinements introduced through interaction with the review panel.
Plans for the park are as understood months ago. The only new detail, and this is a troubling one, is that the "art feature" to the west of the "great lawn" will consist of vertical beams with LED images. The troubing aspect is that such LED arrays can just as readily become advertising billboards as they can be abstract art.
Plans for the stadium seem to present no surprise. We have known about the wooden "veil" around the stadium for more than a year. The really outstanding aspect to me was that the presentation failed to mention the arena buried under the northside stands. Fixing up the arena, known to most people as the Civic Centre, once had some importance. Now it seems to have been forgotten. It is not clear how you will get into the arena in the new plan because shops will fill the north side of the buildiing and there is to be an office complex to the west.
When it comes to the "urban village", a quaint name for the shopping centre, nothing has changed. Yes it is intended to have shops, restaurants etc. on the second floor of the buildings. We have always known that is required because the plans call for vast amounts of retail space. If the second floors were not to be used, the footprint of the commercial buildings would have needed to be much greater.
In the commercial complex the one design feature is that there would be increasing use of wood in the exterior of the buildings, the further those buildings are from Bank Street. Big deal!
So I can only call Tuesday's event a bust. We learned virtually nothing we did not know already.
And all the visual presentations coyly showed all the tower structures as transparent outlines. The justification for such an approach was that the detailed design for those buildings has yet to be determined. Conveniently it also removed from the presentation some of the more egregious aspects of the overall development plan. Out of sight is out of mind.
Tomorrow (Thursday Feb. 9) the second shoe drops. According to oral interventions by the City Manager, a staff report is to be released on the Lansdowne project for consideration at the meeting of Finance and Economic Development Committee (FEDCO) the following week.
Items to look for in the staff report include:
- update on the finances for the project
- report on the competition for air rights and for project construction
- what can go ahead regardless of legal proceedings underway
- what happens if the Court of Appeal fails to support the City.
As always the French-language press seems to be the only source for investigative journalism. Francois Pierre Dufault asks in today's (Wednesday's) Le Droit "The municipal adminstration seems not to be concerned about other approaches, stating even they have no plan B" (my personal translation).
As Maggie Muggins used to say "You never know what is going to happen tomorrow, do you Mr. McGarity."
Wednesday, February 8, 2012
Monday, January 9, 2012
Open Competition
Apparently City Council is to be provided with details concerning the bidding process for residential and office development at Lansdowne Park. We have already been told that Minto was selected for the residential projects but that no acceptable bid was received for the office building proposed for Bank Street. A Fairness Commissioner was appointed to oversee the competition.
All this is fine... so far.
But what will be interesting to learn is the number of bids received for the residential part of the competition. If there were many bidders, that is a good sign. If there were few, we should be concerned.
I fear that there is a sense in the community -- whether right or wrong -- that the fix is in. If that is what developers think, they would not bother bidding.
If there were few bidders we should not blame Minto, the fault lies entirely with the City. Just think back to the City's actions in earlier stages of the Lansdowne redevelopment project.
Because of the redevelopment of Lansdowne, it was determined that trade fair facilities would need to be built elsewhere. The City staff proposed to simply offer City funds to Shenkman Corp. to erect such a facility. Some Councillors thought that was a bit much -- maybe someone else could submit a competitive proposal. So the City ran a competition and Shenkman was the only bidder. This was not surprising -- City staff had already announced that they wanted to give the project to Shenkman. Now it is quite possible that Shenkman was by far the most competent firm to erect and run the trade fair facility. It has now opened on time under the name CE Centre, apparently with good success.
But the original idea of simply granting the job to Shenkman without competition compromised badly the subsequent competition. The fault is not with Shenkman, nor Council (for once); the blame is entirely with City staff.
So now we wait to learn about the competition for the residential buildings. I hope that the tainted competition for the exhibition facility did not negatively affect the competition for the residential development.
All this is fine... so far.
But what will be interesting to learn is the number of bids received for the residential part of the competition. If there were many bidders, that is a good sign. If there were few, we should be concerned.
I fear that there is a sense in the community -- whether right or wrong -- that the fix is in. If that is what developers think, they would not bother bidding.
If there were few bidders we should not blame Minto, the fault lies entirely with the City. Just think back to the City's actions in earlier stages of the Lansdowne redevelopment project.
Because of the redevelopment of Lansdowne, it was determined that trade fair facilities would need to be built elsewhere. The City staff proposed to simply offer City funds to Shenkman Corp. to erect such a facility. Some Councillors thought that was a bit much -- maybe someone else could submit a competitive proposal. So the City ran a competition and Shenkman was the only bidder. This was not surprising -- City staff had already announced that they wanted to give the project to Shenkman. Now it is quite possible that Shenkman was by far the most competent firm to erect and run the trade fair facility. It has now opened on time under the name CE Centre, apparently with good success.
But the original idea of simply granting the job to Shenkman without competition compromised badly the subsequent competition. The fault is not with Shenkman, nor Council (for once); the blame is entirely with City staff.
So now we wait to learn about the competition for the residential buildings. I hope that the tainted competition for the exhibition facility did not negatively affect the competition for the residential development.
Monday, January 2, 2012
A question of process
While we await the decision of the Ontario Court of Appeal regarding the case brought by the Friends of Lansdowne, it is interesting to consider similar issues which do not involve redevelopment of Lansdowne Park.
In the Globe and Mail of Friday December 30, there was an interesting article entitled "Does it matter if our laws are passed illegally?" by Peter H Russell, professor emeritus of political science at the University of Toronto. Professor Russell deals with the fact that Royal Assent was given on Dec. 15 to Bill C-18, the "Marketing Freedom for Grain Farmers Act. This is the legislation which ends the Wheat Board's monopoly for sales of wheat and barley from Western Canada.
Professor Russell notes that on Dec. 7 the Federal Court had ruled that the way Bill C-18 was introduced into Parliament violated the Canadian Wheat Board Act. My understanding is that the Wheat Board Act calls for a referendum among grain producers prior to a change in the monopoly provisions.
This seems to be very similar to situation which applied to City procurement procedures in the case of Lansdowne. The Friends of Lansdowne argued before Ontario Superior Court that the City had violated its own procurement regulations in the way it proceeded with the Lansdowne redevelopment scheme. The Court seemed to take the position that because City Council has the authority to amend its procurement procedures, it has full authority to do whatever it wants. The contrary view, held by the Friends of Lansdowne, was that Council should amend its regulations if it wishes to engage in an as-yet-disallowed procurement action.
So there is a similarity to the Wheat Board matter. The federal government could have first amended the Wheat Board Act to remove the requirement for a referendum, and then eliminated the monopoly feature in the Act. Similarly the City of Ottawa could have modified its procurement procedures, either its procurement by-law or its Ottawa Option procedure for unsolicited proposals, to provide a legitimate basis for its actions in striking its deal with OSEG.
Both the City of Ottawa and, I expect, the Government of Canada, will be needlessly spending resources defending their mistaken ways of operating. It's great news for members of the bar, but not so great for taxpayers.
In the Globe and Mail of Friday December 30, there was an interesting article entitled "Does it matter if our laws are passed illegally?" by Peter H Russell, professor emeritus of political science at the University of Toronto. Professor Russell deals with the fact that Royal Assent was given on Dec. 15 to Bill C-18, the "Marketing Freedom for Grain Farmers Act. This is the legislation which ends the Wheat Board's monopoly for sales of wheat and barley from Western Canada.
Professor Russell notes that on Dec. 7 the Federal Court had ruled that the way Bill C-18 was introduced into Parliament violated the Canadian Wheat Board Act. My understanding is that the Wheat Board Act calls for a referendum among grain producers prior to a change in the monopoly provisions.
This seems to be very similar to situation which applied to City procurement procedures in the case of Lansdowne. The Friends of Lansdowne argued before Ontario Superior Court that the City had violated its own procurement regulations in the way it proceeded with the Lansdowne redevelopment scheme. The Court seemed to take the position that because City Council has the authority to amend its procurement procedures, it has full authority to do whatever it wants. The contrary view, held by the Friends of Lansdowne, was that Council should amend its regulations if it wishes to engage in an as-yet-disallowed procurement action.
So there is a similarity to the Wheat Board matter. The federal government could have first amended the Wheat Board Act to remove the requirement for a referendum, and then eliminated the monopoly feature in the Act. Similarly the City of Ottawa could have modified its procurement procedures, either its procurement by-law or its Ottawa Option procedure for unsolicited proposals, to provide a legitimate basis for its actions in striking its deal with OSEG.
Both the City of Ottawa and, I expect, the Government of Canada, will be needlessly spending resources defending their mistaken ways of operating. It's great news for members of the bar, but not so great for taxpayers.
Monday, July 4, 2011
Diligence overdue
In the hearing before Ontario Superior Court which terminated last week, the lawyer for the Friends of Lansdowne maintained that the only independent review of the financial arrangements supporting the Lansdowne Partnership plan, was the study in 2008 by Deloitte. That study was never released to the public, nor was its existence made known to members of City Council.
The lawyer for the City denied that claim and said there were other studies conducted. It is difficult to take that counter claim seriously.
It was said that the financial arrangements were studied by Graham Bird Associates(GBA) and by PriceWaterhouseCoopers (PWC). But Graham Bird Associates was retained to carry the process through the administrative and legal hoops, not to analyse the deal. Although I believe the contract between the City and GBA is not public, it is difficult to imagine that the firm did not have a strong financial incentive to move the project forward. It is unlikely that GBA would minimize their revenue by placing obstacles in the quick execution of the LPP.
As for PWC, they were retained by GBA, not to analyse the financials of the deal but rather to create a business model based on assumptions provided by the City and their "partner" Ottawa Sports & Entertainment Group.
In arguing the City's case, their lawyer also claimed that the two reports issued by the City Auditor General constitute an independent analysis of the LPP financials. While the Auditor General is independent, his range of examination was tightly controlled. Moreover, the report which the Auditor General received from an independent US consultant on the LPP is not available.
So the bland assurance in staff reports that due diligence has been conducted with respect to the financial arrangements behind the LPP seem to be pure and simple puffery.
The lawyer for the City denied that claim and said there were other studies conducted. It is difficult to take that counter claim seriously.
It was said that the financial arrangements were studied by Graham Bird Associates(GBA) and by PriceWaterhouseCoopers (PWC). But Graham Bird Associates was retained to carry the process through the administrative and legal hoops, not to analyse the deal. Although I believe the contract between the City and GBA is not public, it is difficult to imagine that the firm did not have a strong financial incentive to move the project forward. It is unlikely that GBA would minimize their revenue by placing obstacles in the quick execution of the LPP.
As for PWC, they were retained by GBA, not to analyse the financials of the deal but rather to create a business model based on assumptions provided by the City and their "partner" Ottawa Sports & Entertainment Group.
In arguing the City's case, their lawyer also claimed that the two reports issued by the City Auditor General constitute an independent analysis of the LPP financials. While the Auditor General is independent, his range of examination was tightly controlled. Moreover, the report which the Auditor General received from an independent US consultant on the LPP is not available.
So the bland assurance in staff reports that due diligence has been conducted with respect to the financial arrangements behind the LPP seem to be pure and simple puffery.
Sunday, July 3, 2011
A great landlord
Sitting in Court for seven days provides an opportunity to learn much. One thing I learned is that the City of Ottawa is a very generous landlord.
The Friends of Lansdowne (FoL) are challenging the City's arrangement with Ottawa Sports and Entertainment Group (OSEG) known as the Lansdowne Partnership plan. FoL indicates that the City is providing an illegal "bonus" to OSEG by providing the land for the development of the shopping complex at a mere one dollar per year for a term of thirty years. According to the explanation given to the Court by the City's lawyer, the City is not conferring a "bonus" in its $1 leasing arrangement because there is provision for a payment to the City.
It is in examining that payment that we learn how generous and understanding a landlord the City is.
According to the argument presented to the Court, a calculation of the value of the land was undertaken by the City and the market rent was ascertained. It was then discovered that if the City were granted "deemed equity", and a return to the City on that "deemed equity" were established, a revenue stream equivalent to rent could be projected by using the financial model created under the Lansdowne Partnership plan. No doubt the City's lawyer would say that it is a mere matter of semantics whether such return in considered "rent" or "return on deemed equity".
But there is a bit of a problem with the City's argument. The return on "deemed equity" is only payable at the fifth level of the "waterfall" -- the series of prioritized payouts from the "net cash flow" of the entire Lansdowne Partnership. What this means is that every other financial obligation is to be satisfied prior to the City of Ottawa receiving any return whatever on its "deemed equity".
Payments are made to OSEG not only to provide a return on its investment but also to repay what OSEG has invested (including any payments for cost over-runs on the stadium) before any money is available for the City as a return on its "deemed equity".
So all of this makes the City of Ottawa a remarkable landlord.
Normal landlords don't care about your other financial obligations. If you don't pay your rent in full and on time, you are out on the street. A normal landlord would not allow you to defer rent payment to allow you to pay your bar bills or keep up your car payments.
By contrast, the City of Ottawa is an ideal landlord. The City is happy to permit its tenant to give priority to every other imaginable demand before expecting that any payment equivalent to rent be effected.
May we all be so lucky as to have as splendid a landlord as the City of Ottawa!
The Friends of Lansdowne (FoL) are challenging the City's arrangement with Ottawa Sports and Entertainment Group (OSEG) known as the Lansdowne Partnership plan. FoL indicates that the City is providing an illegal "bonus" to OSEG by providing the land for the development of the shopping complex at a mere one dollar per year for a term of thirty years. According to the explanation given to the Court by the City's lawyer, the City is not conferring a "bonus" in its $1 leasing arrangement because there is provision for a payment to the City.
It is in examining that payment that we learn how generous and understanding a landlord the City is.
According to the argument presented to the Court, a calculation of the value of the land was undertaken by the City and the market rent was ascertained. It was then discovered that if the City were granted "deemed equity", and a return to the City on that "deemed equity" were established, a revenue stream equivalent to rent could be projected by using the financial model created under the Lansdowne Partnership plan. No doubt the City's lawyer would say that it is a mere matter of semantics whether such return in considered "rent" or "return on deemed equity".
But there is a bit of a problem with the City's argument. The return on "deemed equity" is only payable at the fifth level of the "waterfall" -- the series of prioritized payouts from the "net cash flow" of the entire Lansdowne Partnership. What this means is that every other financial obligation is to be satisfied prior to the City of Ottawa receiving any return whatever on its "deemed equity".
Payments are made to OSEG not only to provide a return on its investment but also to repay what OSEG has invested (including any payments for cost over-runs on the stadium) before any money is available for the City as a return on its "deemed equity".
So all of this makes the City of Ottawa a remarkable landlord.
Normal landlords don't care about your other financial obligations. If you don't pay your rent in full and on time, you are out on the street. A normal landlord would not allow you to defer rent payment to allow you to pay your bar bills or keep up your car payments.
By contrast, the City of Ottawa is an ideal landlord. The City is happy to permit its tenant to give priority to every other imaginable demand before expecting that any payment equivalent to rent be effected.
May we all be so lucky as to have as splendid a landlord as the City of Ottawa!
Saturday, July 2, 2011
Foolishness versus illegality
In the seven days in which Ontario Superior Court has heard the case of Friends of Lansdowne versus the City of Ottawa, the complex Lansdowne Partnership Plan has been discussed in great detail. As I have listened to the lawyers present their clients' positions, is has been clear that there is much to criticize.
But for the Court, no matter how unwise or even foolish the arrangement may be, the issue is: do the City's actions constitute a violation of law?
The question of legality goes beyond what is sensible. There is no law against making a bad decision, or, put more bluntly -- stupidity can be perfectly legal.
The argument from the Friends of Lansdowne centres on three issues:
- Can the City of Ottawa ignore its own procurement policies without violating the requirement in the Municipal Act that it establish and maintain such policies;
- Has the financial arrrangment struck with Ottawa Sports and Entertainment Group provided a benefit to a private party which is contrary to the Municipal Act; and
- Has the action of the City in withholding information or in presenting misleading information to the public and to elected officials constituted bad faith.
If the Court finds that any one of the allegations by the Friends of Lansdowne is valid, there may be a basis on which the the actions of the City may be nullified.
But in looking forward to the prospect that the Court might indeed quash the City's arrangment with OSEG, what exactly would that mean in practical terms?
While such a decision by the Court would certainly be a major story in the media and could be a political bombshell, it need not set back the redevelopment of Lansdowne Park in a major way. If the City really wants to rebuild the stadium and fix up the arena, it can go ahead and do so. After all, the City is putting up all the money for the redevelopment. If the City would like to have another organization take on the management of the facilities or to take responsibility for maintenance, it can readily run a competition to select firms to supply such services. If the City wants to sell or lease some of the property to generate revenue, it can do so.
In the hearing last week, the Lansdowne Partnership Plan was likened to a marriage. These days there are all sorts of ways in which relationships develop which are not marriages. And many of us would advise our adult children that rushing into marriage can be unwise.
If the Court decides that the LPP marriage should be annulled, that might be the best outcome for both parties.
But for the Court, no matter how unwise or even foolish the arrangement may be, the issue is: do the City's actions constitute a violation of law?
The question of legality goes beyond what is sensible. There is no law against making a bad decision, or, put more bluntly -- stupidity can be perfectly legal.
The argument from the Friends of Lansdowne centres on three issues:
- Can the City of Ottawa ignore its own procurement policies without violating the requirement in the Municipal Act that it establish and maintain such policies;
- Has the financial arrrangment struck with Ottawa Sports and Entertainment Group provided a benefit to a private party which is contrary to the Municipal Act; and
- Has the action of the City in withholding information or in presenting misleading information to the public and to elected officials constituted bad faith.
If the Court finds that any one of the allegations by the Friends of Lansdowne is valid, there may be a basis on which the the actions of the City may be nullified.
But in looking forward to the prospect that the Court might indeed quash the City's arrangment with OSEG, what exactly would that mean in practical terms?
While such a decision by the Court would certainly be a major story in the media and could be a political bombshell, it need not set back the redevelopment of Lansdowne Park in a major way. If the City really wants to rebuild the stadium and fix up the arena, it can go ahead and do so. After all, the City is putting up all the money for the redevelopment. If the City would like to have another organization take on the management of the facilities or to take responsibility for maintenance, it can readily run a competition to select firms to supply such services. If the City wants to sell or lease some of the property to generate revenue, it can do so.
In the hearing last week, the Lansdowne Partnership Plan was likened to a marriage. These days there are all sorts of ways in which relationships develop which are not marriages. And many of us would advise our adult children that rushing into marriage can be unwise.
If the Court decides that the LPP marriage should be annulled, that might be the best outcome for both parties.
Friday, July 1, 2011
Rube Goldberg remembered
Back in the thirties and forties, there was a noted cartoonist, Rube Goldberg (and a similar British humourist, Heath Robinson) who drew pictures of very complex arrangements of mechanisms to accomplish mundane tasks. Bubbling tea kettles and bouncing balls combined with other devices to turn pages in newspapers or stir soup pots.
After sitting in court for seven days listening to the description of the Lansdowne Partnership Plan, I could not help thinking of those cartoons from the past. The lawyers from both sides described an extraordinarily complex business arrangement. But try as I might, I could not see the need for such complexity.
Much of the humour in the old cartoons comes from imagining the foolishness which would prompt anyone to assemble such ludicrous arrangements. I would have enjoyed the humour in the complexity of the Lansdowne setup, but I kept remembering that somehow I was paying for it all.
In fact, the more the complex arrangement was explained to the judge, the less funny it seemed. The complexity looked as if it were designed to conceal the reality of the arrangement rather than actually contributing to a positive outcome.
After sitting in court for seven days listening to the description of the Lansdowne Partnership Plan, I could not help thinking of those cartoons from the past. The lawyers from both sides described an extraordinarily complex business arrangement. But try as I might, I could not see the need for such complexity.
Much of the humour in the old cartoons comes from imagining the foolishness which would prompt anyone to assemble such ludicrous arrangements. I would have enjoyed the humour in the complexity of the Lansdowne setup, but I kept remembering that somehow I was paying for it all.
In fact, the more the complex arrangement was explained to the judge, the less funny it seemed. The complexity looked as if it were designed to conceal the reality of the arrangement rather than actually contributing to a positive outcome.
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