Report to/Rapport au :

Report to/Rapport au :

Finance and Economic Development Committee /

Comité des finances et du développement économique

18 August 2011 / le 18 août 2011

Submitted by/Soumis par : Kent Kirkpatrick, City Manager / Directeur municipal

Contact Person/Personne ressource : Gordon MacNair, Director, Real Estate Partnerships and Development Office/Directeur, Partenariats et Développement en immobilier

(613) 580-2424 x 21217, Gordon.MacNair@Ottawa.ca

City Wide / À l’échelle de la Ville

Ref N°: ACS2010-CMR-REP-0027

SUBJECT:

Lansdowne Partnership plan implementation Status Update

OBJET :

Mise À JOUR SUR L’ÉTAT D’AVANCEMENT DE LA MISE EN œuvre DU plan dE PARTENARIAT de Lansdowne

REPORT RECOMMENDATIONS

That the Finance and Economic Development Committee recommend Council:

Receive the Lansdowne Partnership Plan Implementation Status Update report and approve the timing for subsequent status updates as outlined in this report;

Confirm that the role of the Urban Design Review Panel (UDRP) in the Lansdowne Stage 2 site plan approval be to review the final architectural plans for the air rights developments based on the conceptual plans and directions established by the Lansdowne Design Review Panel (LDRP) as described in this report and further that the UDRP provide the comments generated by their review to the General Manager of Planning and Growth Management;

Approve the revised project schedule and spending plan as outlined in this report; and,

4. Delegate the authority to the City Manager to negotiate and execute a cost-sharing agreement with the Ottawa Sports and Entertainment Group (OSEG) on behalf of the City that is reflective of the spending plan as described in this report and within the approved budget envelopes for the Lansdowne redevelopment.

RecommandationS du rapport

Que le Comité des finances et du développement économique recommande au Conseil :

de recevoir le rapport de compte rendu sur la mise en œuvre du Plan de partenariat du parc Lansdowne et d’approuver l’échéancier des prochains comptes rendus, tel qu’indiqué dans le présent rapport;

de confirmer que le rôle du Comité d’examen du design urbain dans le cadre de l’approbation de la phase 2 du plan d’implantation de Lansdowne soit d’examiner les plans d’architecture finaux relatifs à l’aménagement des droits aériens axés sur les plans de conception et les orientations établis par le Groupe consultatif et de révision stratégique de la conception du parc Lansdowne, comme le décrit le présent rapport, et ensuite, que le Comité d’examen du design urbain fournisse les commentaires générés à la suite de son examen au directeur général d’Urbanisme et Gestion de la croissance;

d’approuver la version révisée du calendrier du projet et du plan des dépenses, comme l’explique le présent rapport;

4. de déléguer le pouvoir au directeur municipal afin qu’il négocie et conclue une entente de partage des coûts avec le Ottawa Sports and Entertainment Group (OSEG), au nom de la Ville d’Ottawa, qui reflète le plan des dépenses tel que décrit dans le présent rapport et qui respecte les enveloppes budgétaires approuvées pour le projet de réaménagement du parc Lansdowne.

Executive Summary

The purpose of this report is to provide a status update on the work completed to date and recommendations related to adjustments to the project schedule and associated spending plan to facilitate the successful implementation of the Lansdowne redevelopment within the existing Council approved budget allocations.

The status update report from Graham Bird and Associates (GBA) attached as Document 1 of this report, focuses on the following areas:

· Planning – Site plan development, process and approvals;

· Project schedule and associated spending plan;

· Retail leasing program; and,

· Financial pro forma and assumptions.

Each of these areas is covered in detail in the GBA report. This Executive Summary highlights the key considerations contained in the GBA report and the rationale for the recommendations contained in this report.

Planning – Site Plan Development, Process and Approvals

Site Plan Approval

The integrated project team (the City and OSEG) has been working to meet the various site plan conditions required by Council in November 2010. The project team has focused on the development of numerous design documents which set out guidelines, principles and directions that will be integrated into the final site plan and implemented through the detailed design work required to prepare tender documents and building permit plans.

The work undertaken to date has resulted in the development of a final site plan which the LDRP is conditionally approving with the exception of the conceptual architecture plan which is still evolving. As part of the final site plan, the LDRP has approved a Design Manual that includes the comprehensive guidelines, strategies and directions developed to respond to the conditions set out in the 19 November 2010 Site Plan Control – Integrated Site Plan – Lansdowne Partnership Plan (File No. D07-12-10-0220) report (Ref N°: ACS2010-ICS-PGM-0209) report prior to finalizing the site plan.

Lansdowne Design Review Panel (LDRP) and Urban Design Review Panel (UDRP) Process

The LDRP is conditionally approving the final plans that Council mandated they be the final review authority for, and has approved the guidelines, strategies and directions contained in the Design Manual to guide implementation. The LDRP has retained its review role for finalizing and signing off on the details for the landscaping plan prior to tender documents being released.

The LDRP has also retained final review and approval authority for the final architectural plans on a building-by-building basis. The role of the UDRP is proposed to provide review and comment to staff on the final architectural plans for the air rights developments based on concepts reviewed and signed off on by the LDRP.

The continued role of the LDRP and the timelines for finalizing the LDRP reviews and approval of final plans has been confirmed with the LDRP within the modified project schedule.

Project Schedule and Associated Spending Plan

The completion date for the overall Lansdowne redevelopment has shifted from the end of 2013 to the fall of 2014. The renewed stadium will be substantially complete by December 2013. Despite this shift in completion dates the capital budgets allocated for design and construction have remained intact for the stadium and related parking elements.

Lansdowne Park Revitalization Schedule

The project schedule as set out in Document 1 to this report outlines the key activities and milestones through the design development and subsequent construction phase of the project.

The Stage 2 design development phase is scheduled to continue until late spring 2012 and Stage 3 construction to begin June 2012. Stage 2 concludes with the issuance of tender documents and receipt of the various permits required to initiate construction and the closing of the project agreements.

By the winter of 2013 major construction begins for the mixed-use commercial and residential blocks, with building envelopes completed by the fall of 2013 and internal fit-up completed by the summer of 2014. This includes the office and residential portions to be undertaken by Request for Offers (RFO) Air Rights developers. Substantial completion of the north and south side stands will occur by December 2013. Following completion of the parking garage, the landscaping and major works for the urban park will take place in the spring of 2014 and are anticipated to be substantially complete by the fall of 2014 with full completion scheduled for the summer of 2015. The Stage 3 construction schedule enables the Canadian Football League (CFL) and North American Soccer League (NASL) team to be fully operational by the spring of 2014.

The elements of the schedule that are being recommended for completion prior to close of the partnership include the following:

· Completion of the stadium, arena and parking garage designs;

· Removal of contaminated soils;

· Demolition of the South Side Stands;

· Acquisition of the steel and related speciality equipment required for the relocation of the Horticulture Building; and,

Completion of the Building Permit applications for the stadium, arena and parking garage.

Spending Plan

The original Stage 2 budgeted costs for both the City and OSEG were $6.5M each until close in June 2011. The revised projected costs to be spent prior to close by the City have increased to approximately $21M. OSEG’s total projected expenditures for Stage 2 have increased to approximately $10.9M. Although this change is significant, this report details the reasons for the increase in the projected expenditures during Stage 2 Implementation. These are costs which fall under the overall project budget and do not reflect an increase in total project budget.

In the June 2010 budget, these costs were projected to have been spent across Stage 2 and Stage 3; however the change in design development strategy, from permit-ready to permitted, tendered and contracted, results in nearly all of the major detailed design development work by architects and engineers taking place prior to close. This is a significant amount of work. For example, working drawings must be brought up to 95% completion prior to close instead of 30% which was what was assumed in the June 2010 project and spending plans. This accounts for the bulk of the increase in costs to close.

In addition to this, as the design work progresses, concurrent activity must occur and be integrated into the design elements such as sustainability, accessibility compliance and work to ensure cost control oversight of the designs. Additionally, these costs include expediting major tasks before close to reduce the overall project construction schedule including the demolition of the south side stands, pre-ordering materials and equipment for the Horticulture Building and the potential cost of relocating the contaminated soils. Ultimately, this results in expenditures occurring earlier, but not an overall increase in the associated budget. The City retains ownership of the design products for the stadium and parking and therefore the value of the majority of these expenditures in the event that the project agreements do not close.

Cost Sharing Agreement

The cost sharing agreement will assign costs for the following components of the Lansdowne redevelopment:

Stadium;
Parking garage;
Urban Park;
Retail;
Residential; and,
Office.

The cost sharing of capital (and operating) costs for Lansdowne will vary depending on the nature of the expense. For example, some costs will be shared between all components (stadium, parking garage, urban park, retail, residential and office), while others will be specific to certain components depending on the nature of the costs and which partner benefits or requires the costs to occur. The First and Second Cost Sharing Agreements which were approved by Council on 28 June 2010, have expired due to the passage of time. It is therefore prudent and necessary that a new Cost Sharing Agreement be entered into by the parties to take them through to the closing of the Project Agreements.

It is recommended that Council delegate the authority to the City Manager to negotiate and execute, on behalf of the City, a cost-sharing agreement reflective of the spending plan as described in this report and within the previously approved budget envelopes for the Lansdowne redevelopment.

Future Status Updates

As the implementation work proceeds, staff will provide Council with regular updates on the progress and status of the elements identified in the revised project plan. Council, and in some instances Planning Committee, will receive a series of reports in the fall of 2011 including:

· legal agreements;

· governance model;

· formal agreement between the City and the Ottawa Farmers’ Market;

· the urban park programming proposal and costing;

· the Lighting Strategy; and,

· the detailed signage and wayfinding plans.

The partnership agreements will also be before Council in the spring of 2012 for closure prior to commencing construction.

Additionally, staff will report back to Council as soon as possible should it become apparent that any of the outcomes identified through Council direction or key milestones in the project schedule cannot be met.

Retail Leasing Program

OSEG continues to work on the retail leasing program. Many local and national prospective tenants have expressed interest in being at Lansdowne. OSEG remains in consultation with J.C. Williams Group to ensure that the leasing efforts will meet the requirements described in the June 2010 retail strategy approved by Council.

Financial Pro Forma and Assumptions

PriceWaterhouseCoopers (PWC) was engaged to complete a comprehensive review and update of the assumptions contained in the June 2010 pro forma. The following is an excerpt from the August 2011 PWC report:

The financial outlook for the City of Ottawa’s interest in the Lansdowne transformation has been changed by a number of developments and updated assumptions to the variables in the project from the pro forma presented in June 2010. The purpose of this update is to provide a summary of the affected components of the Lansdowne transformation and their effect on the City’s total payments, and the extent to which this project is revenue neutral for the City. The affected components are:

· The retail development;

· The stadium and arena; and

· Macro-economic factors.

The Retail Development

The retail development that is to accompany the stadium and area continues to be sized at approximately 360,000 square feet of leasable space, with a requirement to build 360 parking stalls, fund infrastructure, common space and to contribute $2.5 million to the urban park budget. Changes are as follows:

· The City’s share of property taxes that are expected to be generated from the Lansdowne development in 2014 have increased from $3.48 million to $3.92 million. The increase is due to the higher anticipated net operating income of the retail development. We note that prior to close, an independent tax assessment of the retail development will be conducted, which will form the basis for the calculation of the City’s final funding equity included in the closed system.

· In June 2010 the retail development contained approximately 45,000 square feet of integrated office space. Due to market demand this has since been converted to retail, which is expected to yield higher rents and thus higher property taxes to the City. This change affects both the net cash flow into the waterfall and the calculation of the City’s funding equity.

· The total development cost per square foot of gross space (estimated to be approximately 399,000 square feet) of the retail development (including the cost of the parking, infrastructure and the contribution to the front lawn) has increased from $290.76 to $319.95. This yields a total capitalized development cost of $127.6 million (up from $98.9 million). The increase in development costs is primarily due to increases in base building costs and to tenant inducements.

· The mortgage required to fund the retail has been set at 65% of the value of the retail, or approximately $101.4 million. The anticipated all-in interest rate on the mortgage has been reduced from 7% to 6.5%, yielding an approximate annual payment of $7.8 million per year (assuming a 30 year amortization).

· OSEG’s equity contributed to fund the retail (the difference between the total development cost and the size of the retail mortgage) has increased from approximately $12.6 million to $26.1 million. This is primarily due to the higher development costs of the retail.

Impact of changes: the increased cost of the retail development is offset by the increased value (as a result of the higher rents achieved), and lower costs of financing, as is shown in the following table:

Item	June 2010 estimate	August 2011 estimate
Annual cash from retail contributed to the waterfall (after mortgage payments, and vacancies 2014$)	$1.36 M	$2.22 M
Annual taxes contributed to the City (2014$)	$3.48 M	$3.92 M

The Stadium and Arena

The total anticipated development cost for the stadium, arena and parking remains at $129.3 million. No changes are anticipated to the operating pro forma from those presented in June 2010, save the impact of commencing operations in 2014 (a year later).

Macroeconomic Factors

In addition to those changes described above, certain macroeconomic factors have changed:

· Inflation: by delaying the project by one year, both capital and operating costs have been impacted. The inflationary cost pressure on the stadium, arena and parking was reviewed by the City’s project manager and it was concluded that this can be accommodated within the City’s capital budget of $129.3 million. The increased cost pressure on the retail development has been included in the higher development costs seen above. During the operating period, both costs and revenues are subject to inflation, thus one is expected to partially offset the other such that the inflationary impact of opening in 2014 is not believed to present downside risk to the cash flows from the project’s operations.

· OSEG’s interest rate: As previously described, OSEG’s all-in interest rate has been decreased from 7% to 6.5%.

· The City’s interest rate: The City’s effective borrowing rate (the current rate posted by Infrastructure Ontario on 40 year fully amortizing debt) is currently 4.3%, which is 0.7% below the rate of 5.0% carried in the pro forma. In June 2010 the rate used was 5.35%. Should the rate at the time of close be below 5.0%, the City’s cost of borrowing and funding equity will be lower than those presented in this report.

Impact on Equity and Waterfall Payments

The changes to the assumptions that drive the pro forma affect the City’s funding equity, OSEG’s additional equity, and the total returns both parties expect to receive through the operating period, as shown below:

Item	June 2010 estimate	August 2011 estimate	Difference
City’s funding equity	$13.5 M	$2.5 M	-$11.0 M
OSEG’s minimum equity	$30.0 M	$30.0 M	$0.0 M
OSEG’s additional equity	$2.3 M	$15.8 M	$13.5 M

The impact of increasing OSEG’s additional equity and decreasing the City’s funding equity, along with higher rents from the retail development, have changed the expected payments from the waterfall to each party, as shown below:

Total waterfall payments are expected to increase from approximately $245.2 million to $257.6 million, a difference of $12.4 million. OSEG’s expected payments are expected to increase by $14.4 million, reflecting returns on the increase in additional equity of $13.5 million. The City’s payments are expected to decrease by approximately $1.9 million reflecting lower returns given the reduction in the City’s funding equity of $11.0 million.

Waterfall summary	August 2011	June 2010	Difference
City Share ($)	$143.3 M	$141.4 M	-$1.9 M
OSEG Share ($)	$101.9 M	$116.3 M	$14.4 M
Total	$245.2 M	$257.6 M	$12.4 M

Summary

The following table shows total returns to the City including the avoided costs of operating and maintaining the stadium and arena, waterfall payments, debt servicing costs, and the net requirement from retail and office property taxes on the Lansdowne site, both on a nominal and on a present value basis.

	Nominal		NPV
	Jun-10	Aug-11	Jun-10	Aug-11
Avoided costs	$114.0 M	$114.0 M	$48.0 M	$48.0 M
Waterfall payments (excluding payments to the lifecycle reserve)	$84.9 M	$82.9 M	$21.7 M	$21.5 M
Sub total	$198.9 M	$196.9 M	$69.7 M	$69.5 M
Total debt servicing	-$218.8 M	-$208.1 M	-$91.9 M	-$87.7 M
Sub total	-$20.0 M	-$11.2 M	-$22.2 M	-$18.2 M
Property taxes	$155.5 M	$175.6 M	$59.5 M	$67.2 M
Required from taxes	13%	6%	37%	27%

· Avoided costs: unchanged.

· Waterfall payments: payments to the City from the waterfall have decreased both on a nominal and on a present value basis, primarily due to the City’s lower funding equity position.

· Total debt servicing: the City’s total debt servicing costs are lower on a nominal and on a present value basis due to the City’s lower cost of borrowing.

· Property taxes: total expected property taxes have increased both on a nominal and on a present value basis due to the increased rents the retail development is expected to achieve.

In summary, based on the changes listed above, the net property taxes required in order to achieve revenue neutrality for the City is expected to be 6% on a nominal basis, and 27% on a present value basis. This represents an improvement to the City’s overall expected returns net of costs from those presented in June 2010.

SOMMAIRE

Le 28 juin 2010, le Conseil a approuvé le rapport sur la mise en œuvre du Plan de partenariat du parc Lansdowne (Nº de référence : ACS2010-CMR-REP-0034) qui autorise le personnel à entamer la phase 2 du projet de revitalisation du parc Lansdowne, et qui enjoint le personnel à entreprendre la mise en œuvre du Plan de partenariat du parc Lansdowne (PPPL) par l’amorce des processus nécessaires à l’approbation des plans.

L’objet du présent rapport est de fournir une mise à jour de l’état d’avancement des travaux achevés à ce jour, et d’avancer des recommandations quant au calendrier du projet et au plan des dépenses s’y rapportant en vue de faciliter la mise en œuvre réussie de projet de réaménagement du parc Lansdowne, en respectant les allocations budgétaires approuvées par le Conseil.

Le rapport de mise à jour de l’état d’avancement du projet de Graham Bird and Associates (GBA), annexé au présent rapport en tant que Document 1, aborde les éléments suivants :

· Planification – élaboration, processus et approbations du plan d’implantation;

· Calendrier du projet et plan des dépenses s’y rapportant;

· Programme de location pour la composante de commerce de détail; et,

· Pro forma et hypothèses financières.

Le rapport de GBA aborde chacun de ces éléments de façon détaillée. Le présent sommaire expose les grandes lignes des considérations clés présentes dans le rapport de GBA, et la justification des recommandations formulées dans le présent rapport.

Planification – élaboration, processus et approbations du plan d’implantation

Approbation du plan d’implantation

L’équipe de projet intégrée (la Ville et l’OSEG) s’affaire depuis un certain temps à satisfaire aux différentes conditions exigées par le Conseil au mois de novembre 2010. L’équipe du projet a œuvré sur l’élaboration de plusieurs documents portant sur la conception qui établissent des lignes directrices, des principes et des directives qui seront intégrés au plan d’implantation définitif, et mis en œuvre par l’entremise de travaux conceptuels détaillés requis pour la préparation de documents d’appel d’offres et de plans pour l’obtention de permis de construction.

Les travaux entrepris à ce jour se sont soldés par la production d’un plan d’implantation définitif approuvé de façon conditionnelle par le Groupe consultatif et de révision stratégique de la conception du parc Lansdowne, à l’exception du plan d’architecture conceptuelle que l’on peaufine de façon continue. Un manuel de conception a été approuvé par le Groupe consultatif et de révision stratégique de la conception du parc Lansdowne et fera partie intégrale du plan d’implantation définitif. Ce manuel comprend dans leur intégralité les lignes directrices, les stratégies et les directives élaborées afin de répondre aux conditions énoncées dans le rapport du 19 novembre 2010 Vérification du plan d’implantation – plan cadre d’implantation intégré – plan de partenariat du parc Lansdowne (N^o de dossier D07-12-10-0220) (Nº de référence : ACS2010-ICS-PGM-0209) avant l’obtention du plan d’implantation définitif.

Processus du Groupe consultatif et de révision stratégique de la conception du parc Lansdowne et du Comité de révision de la conception urbaine

Le Groupe consultatif et de révision stratégique de la conception du parc Lansdowne approuve de façon conditionnelle les plans définitifs pour lesquels le Conseil lui a octroyé le pouvoir final de décision, et a approuvé les lignes directrices, les stratégies et les directives figurant dans le manuel de conception afin de faciliter le processus de mise en œuvre. Le Groupe consultatif et de révision stratégique de la conception du parc Lansdowne continuera d’exercer son rôle de révision en ce qui a trait à la finalisation et à l’approbation des particularités du plan d’aménagement paysager avant l’émission des documents d’appel d’offres.

On a également octroyé au Groupe consultatif et de révision stratégique de la conception du parc Lansdowne le pouvoir final de décision et de révision des plans architecturaux définitifs pour chaque bâtiment. Le rôle proposé du Comité de révision de la conception urbaine consiste à assurer la révision et offrir une rétroaction au personnel à l’égard des plans architecturaux définitifs pour l’exploitation des droits aériens, en s’appuyant sur les concepts révisés et approuvés par le Groupe consultatif et de révision stratégique.

Le rôle continu du Groupe consultatif et de révision stratégique de la conception du parc Lansdowne, et le calendrier régissant les révisions et l’approbation finale des plans définitifs par le Groupe consultatif lui ont été confirmés dans le cadre de l’élaboration du calendrier du projet modifié.

Calendrier du projet et plan des dépenses s’y rapportant

La date d’achèvement du réaménagement du parc Lansdowne a été reportée de la fin de 2013 à l’automne 2014. Le stade rénové sera fonctionnel au printemps 2014, au lieu de l’automne 2013, comme prévu à l’origine. Malgré le décalage des dates d’achèvement des travaux, les budgets d’immobilisation alloués pour la conception et les travaux de construction du stade et des composantes de stationnement s’y rattachant sont demeurés intacts.

Calendrier de la revitalisation du parc Lansdowne

Le calendrier du projet tel qu’énoncé dans le Document 1 du présent rapport permet un aperçu des activités et des étapes importantes clés tout au long de l’élaboration de la conception et des phases subséquentes de construction du projet.

La phase 2 – développement conceptuel – est prévue se poursuivre jusqu’à la fin du printemps 2012, et la phase 3 – travaux de construction – doit débuter en juin 2012. La phase 2 se soldera par l’émission de documents d’appels d’offres et de reçus pour les différents permis requis pour amorcer les travaux de construction et pour conclure les ententes du projet.

Les travaux de construction majeurs des composantes commerciales et résidentielles à utilisation mixte sont prévus pour l’hiver 2013. La construction des enveloppes des bâtiments doit être achevée à l’automne 2013, alors que les travaux d’aménagement intérieur seront menés à terme avant l’été 2014. Cela comprend les bureaux et les logements pour lesquels on procèdera à des demandes de propositions (DP) pour les droits aériens. Les gradins du côté nord seront en grande partie achevés avant décembre 2013, et les gradins du côté sud avant décembre 2013. Suite à l’achèvement du garage de stationnement, l’on procédera aux travaux d’aménagement paysager et aux travaux d’envergure visant le parc urbain au printemps 2014. Ces travaux devraient être en grande partie terminés à l’automne 2014, et leur achèvement est prévu à l’été 2015. Le calendrier de la phase 3 – travaux de construction – permettrait à l’équipe de la Ligue canadienne de football (LCF) et à l’équipe de la North American Soccer League (NASL) d’être entièrement fonctionnelles avant au printemps 2014.

Parmi les éléments du calendrier pour lesquels on recommande l’achèvement avant la conclusion du partenariat, on retrouve :

· L’achèvement de la conception du stade, de l’aréna et du garage de stationnement;

· Le retrait des sols contaminés;

· La démolition des gradins du côté sud;

· L’achat de l’acier et de l’équipement devant servir au déménagement de l’édifice de l’Horticulture; et,

L’achèvement du processus de demandes de permis de construction pour le stade, l’aréna et le garage de stationnement.

Plan des dépenses

Les coûts budgétés pour la phase 2 pour la Ville et l’OSEG étaient de 6,5 M$ chacun, jusqu’à la conclusion de la phase en juin 2011. Les coûts estimés révisés devant être assumés par la Ville avant la fermeture des comptes pour cette phase ont augmenté, pour atteindre environ 21 M$. Les dépenses totales estimées pour l’OSEG s’élèvent désormais à 10,9 M$. Bien que cette augmentation des coûts soit considérable, les raisons pour la hausse des dépenses prévues pour la mise en œuvre de la phase 2 du projet sont expliquées en détail dans le présent rapport. Il s’agit de coûts compris dans le budget global du projet, mais qui ne se traduisent pas par une hausse du budget total pour le projet.

Dans le budget de juin 2010, on prévoyait dépenser ces coûts sur l’ensemble des phases 2 et 3. Par contre, les modifications effectuées à la stratégie de développement conceptuel - les démarches pour l’obtention des permis, l’obtention des permis, les appels d’offres et l’octroi des contrats pour les travaux – représentent la quasi-totalité des travaux de développement conceptuel détaillés entrepris par des architectes et des ingénieurs, et devant être achevés avant la fermeture des comptes pour ces phases. Cela représente un travail considérable. Prenons l’exemple des plans d’exécution; ceux-ci doivent être achevés à 95 % avant la conclusion de la phase, au lieu de 30 %, comme prévu à l’origine dans les plans du projet et des dépenses, en juin 2010. Voilà qui explique en grande partie l’augmentation des coûts à assumer.

De plus, pendant le déroulement des travaux de conception, les tâches simultanées doivent être effectuées et intégrées à même les composantes de la conception, comme la durabilité, la conformité à l’accessibilité et les travaux effectués afin d’assurer le suivi budgétaire en matière de contrôle des coûts liés à la conception. Ces coûts comprennent également le contrôle du déroulement des travaux d’envergure avant la fermeture des comptes, afin d’alléger le calendrier global des travaux de construction du projet, y compris la démolition des gradins du côté sud, la commande des matériaux et de l’équipement pour l’édifice de l’Horticulture, ainsi que les coûts éventuels pour le déplacement des sols contaminés. En fin de compte, cela se traduit par une augmentation des dépenses lors des phases initiales du projet, mais ne représente pas une augmentation globale du budget associé. La Ville conserve la propriété des composantes conceptuelles pour le stade et le garage de stationnement, et par conséquent la majorité des dépenses connexes, dans l’éventualité d’une non-conclusion des ententes du projet.

Entente de partage des coûts

L’entente de partage des coûts attribuera les coûts associés aux composantes suivantes du réaménagement du parc Lansdowne :

le stade
le garage de stationnement
le parc urbain
la composante de commerce de détail
la composante résidentielle, et
les bureaux

Les coûts à partager pour les dépenses en immobilisations (et les coûts d’exploitation) pour le parc Lansdowne sont appelés à varier selon la nature des dépenses. Certains coûts, par exemple, seront répartis sur l’ensemble des composantes (le stade, le garage de stationnement, le parc urbain, les composantes de commerce de détail et résidentielle, et les bureaux), alors que d’autres cibleront des composantes en particulier, dépendamment de la nature des coûts, et en fonction des besoins des partenaires de ce projet ou des avantages pour eux d’assumer ces coûts.

On recommande au Conseil de déléguer au directeur municipal le pouvoir de négocier et de signer, au nom de la Ville, une entente de partage des coûts qui reflète le plan des dépenses tel que décrit dans le présent rapport, et qui se situe à l’intérieur du cadre budgétaire approuvé pour le projet de réaménagement du parc Lansdowne.

Mises à jour futures sur l’état d’avancement

Tout au long du déroulement des travaux de mise en oeuvre, le personnel municipal fournira des mises à jour périodiques au Conseil sur l’état d’avancement des composantes figurant dans le plan du projet révisé. Le Conseil recevra une série de rapports à l’automne 2011, y compris :

· les ententes juridiques;

· le modèle de gouvernance;

· l’entente formelle entre la Ville et le Marché des producteurs agricoles d’Ottawa;

· la proposition et l’établissement des coûts de programmation du parc urbain; et,

· la stratégie en matière d’éclairage.

Les ententes de partenariat seront également déposées devant le Conseil au printemps 2012 en vue de leur conclusion avant le début des travaux de construction.

De plus, le personnel municipal présentera un rapport au Conseil le plus tôt possible, s’il s’avère qu’un ou plusieurs des enjeux ciblés par les directives de Conseil ou qu’une étape importante clé ne pourront être achevés comme prévu dans le calendrier du projet.

Programme de location pour la composante commerciale

L’OSEG poursuit son travail dans le cadre du programme de location pour la composante commerciale. Plusieurs locataires locaux et nationaux potentiels ont exprimé leur intérêt d’avoir un emplacement au parc Lansdowne. L’OSEG demeure en consultation avec J.C. Williams Group afin d’assurer que les efforts déployés pour la location satisferont aux exigences énoncées dans la stratégie de commerce de détail adoptée en juin 2010, et approuvée par le Conseil.

Pro forma financier

PriceWaterhouseCoopers (PWC) a été embauché pour effectuer un examen complet et mettre à jour les hypothèses contenues dans le pro forma de juin 2010. Ce qui suit est tiré du rapport de PWC d’août 2011 :

Les perspectives financières de l’intérêt de la Ville d’Ottawa dans la transformation de Lansdowne ont évolué en raison d’un certain nombre de développements et d’hypothèses révisées en ce qui a trait aux variables du projet. La présente mise à jour fournit un résumé des composants de la transformation de Lansdowne qui sont touchés, de leur effet sur les recettes totales de la Ville et du degré de neutralité des recettes du projet pour la Ville. Les composants touchés sont :

· le développement du commerce de détail;

· le stade et l’aréna; et

· les facteurs macroéconomiques.

Le développement du commerce de détail

Le développement du commerce de détail qui doit accompagner le stade et ses alentours conserve une superficie approximative de 360 000 pieds carrés d’espace locatif, avec l’exigence d’aménager 360 places de stationnement, de financer l’infrastructure et les espaces communs et de verser 2,5 millions de dollars au budget du parc urbain. Les changements importants sont les suivants :

· Des impôts fonciers que doit produire le développement de Lansdowne en 2014 sont passés de 3,48 à 3,92 millions de dollars. Cette hausse est due au revenu d’exploitation net prévu plus élevé du développement du commerce de détail. Nous notons qu’avant la clôture, une évaluation indépendante du développement du commerce de détail sera effectuée et servira de base au calcul du financement en capitaux propres réel de la Ville compris dans le système fermé.

· En juin 2010, le développement du commerce de détail couvrait environ 45 000 pieds carrés de locaux à bureaux intégrés, qui ont depuis été convertis en commerce de détail. On s’attend à ce qu’ils rapportent des loyers et des impôts fonciers plus élevés à la Ville. Ce changement affecte le flux de trésorerie net du modèle en cascade et le calcul du financement en capitaux propres de la Ville.

· Le coût total de développement par pied carré d’espace brut (y compris le coût du stationnement, des infrastructures et de la contribution à la pelouse avant) est passé de 290,76 à 319,95 millions de dollars. Il en résulte un coût de développement capitalisé total de 127,6 millions de dollars (une hausse par rapport aux 98,9 millions de dollars prévus à l’origine). La hausse des coûts de développement est due principalement aux hausses des coûts de construction de base et à des incitatifs aux locataires.

· L’hypothèque nécessaire pour le financement du commerce de détail a été établie à 65 % de la valeur du commerce de détail, soit environ 101,4 millions de dollars. Le taux d’intérêt total anticipé sur l’hypothèque a diminué de 7 à 6,5 %, soit un paiement de quelque 8,2 millions de dollars par an (en supposant un amortissement de 30 ans).

· La contribution en capitaux propres de l’OSEG au financement du commerce de détail (l’écart entre le coût total de développement et le montant de l’hypothèque du commerce de détail) est passée de quelque 12,6 à 26,1 millions de dollars. Cela est dû surtout à la hausse des coûts de développement du commerce de détail.

Incidence des changements : le coût plus élevé du développement du commerce de détail est compensé par la valeur accrue (comme on l’a constaté dans les loyers plus élevés obtenus) et des coûts de financement moindres, comme le montre le tableau ci-dessous :

Poste

Évaluation de juin 2010

Évaluation
d’août 2011

Apport annuel en argent comptant du commerce de détail au modèle en cascade (après paiement de l’hypothèque, en $ de 2014)

$1.36 M

$2.22 M

des impôts annuels versés à la Ville

(en $ de 2014)

$3.48 M

$3.92 M

Le stade et l’aréna

Le total du coût de développement prévu pour le stade, l’aréna et le stationnement demeure à 129,3 millions de dollars. Aucun changement n’est prévu dans les pro forma d’exploitation par rapport à ceux présentés en juin 2010, sauf l’effet du début d’exploitation au début 2014 (un an plus tard).

Facteurs macroéconomiques

En plus des changements décrits ci-dessus, certains facteurs macroéconomiques ont changé :

· Inflation : Le fait de retarder d’un an le projet a eu des répercussions sur les dépenses en capital et les dépenses d’exploitation. On estime que le budget d’investissement de la Ville, qui s’élève à 129,3 millions de dollars, peut accommoder la pression inflationniste sur le coût du stade, de l’aréna et du stationnement. Durant la période d’exploitation, les coûts et les recettes sont soumis à l’inflation. On s’attend donc à ce que les coûts compensent en partie les recettes de sorte que l’effet inflationniste d’une ouverture en 2014 n’est pas censé présenter de risque négatif important pour le projet.

· Taux d’intérêt de l’OSEG : Comme on l’a décrit précédemment, le taux d’intérêt total de l’OSEG a diminué de 7 à 6,5 %.

· Taux d’intérêt de la Ville : le taux créditeur effectif de la Ville (le taux actuel affiché par Infrastructure Ontario sur une débenture entièrement amortie en 40 ans) est actuellement de 4,3 %, soit 0,7 % de moins que le taux de 5,0 % précédemment indiqué dans le pro forma. Si le taux réel demeure inférieur à 5,0 %, le coût d’emprunt et du financement en capitaux propres de la Ville sera inférieur à ceux présentés dans ce rapport.

Impact sur les paiements d'équité et de cascade

Les changements aux hypothèses qui entrent dans le calcul des pro forma influent sur le financement en capitaux propres de la Ville, les capitaux propres additionnels de l’OSEG et les recettes totales que les deux parties comptent recevoir au cours de la période d’exploitation, comme suit :

Poste	Évaluation de juin 2010	Évaluation d’août 2011	Écart
Financement en capitaux propres de la Ville	$13.5 M	$2.5 M	-$11.0 M
Capitaux propres minimums de l’OSEG	$30.0 M	$30.0 M	$0.0 M
Capitaux propres additionnels de l’OSEG	$2.3 M	$15.8 M	$13.5 M

L’effet de l’augmentation des capitaux propres supplémentaires de l’OSEG et de la diminution du financement en capitaux propres de la Ville, ainsi que des loyers plus élevés du développement du commerce de détail a modifié les recettes attendues par chaque partie, comme suit :

On s’attend à ce que le total des versements dans le modèle en cascade passe de quelque 245,2 à 257,6 millions de dollars, soit un écart de 12,4 millions de dollars. On s’attend à ce que les recettes prévues de l’OSEG augmentent de 14,4 millions de dollars et que celles de la Ville diminuent de 1,9 million de dollars environ. Prière de noter que les retours plus élevés de l’OSEG sont dus en partie au fait que l’on s’attend à ce qu’il verse des capitaux propres supplémentaires de 13,3 millions de dollars de plus qu’en juin 2010, dont le retour est reflété dans les recettes totales.

Résumé du modèle en cascade	Août 2011	Juin 2010	Écart
Quote-part de la Ville ($)	$143.3 M	$141.4 M	-$1.9 M
Quote-part de l’OSEG ($)	$101.9 M	$116.3 M	$14.4 M
Total	$245.2 M	$257.6 M	$12.4 M

Résumé

Le tableau suivant montre le total des retours pour la Ville, y compris les coûts d’exploitation et d’entretien évités pour le stade et l’aréna, les versements au modèle en cascade, le service de la dette et les exigences nettes des taxes sur le commerce de détail et les locaux à bureaux sur le site de Lansdowne, à la fois sur une base de valeur nominale et sur une base de valeur actualisée.

	Valeur nominale		Valeur actualisée
	Juin 2010	Août 2011	Juin 2010	Août 2011
Coûts évités	$114.0 M	$114.0 M	$48.0 M	$48.0 M
Versements au modèle en cascade (sauf paiements à la réserve du cycle de vie)	$84.9 M	$82.9 M	$21.7 M	$21.5 M
Total partiel	$198.9 M	$196.9 M	$69.7 M	$69.5 M
Total du service de la dette	-$218.8 M	-$208.1 M	-$91.9 M	-$87.7 M
Total partiel	-$20.0 M	-$11.2 M	-$22.2 M	-$18.2 M
Impôts fonciers	$155.5 M	$175.6 M	$59.5 M	$67.2 M
Requis des impôts	13%	6%	37%	27%

· Coûts évités : aucun changement

· Versements au modèle en cascade : ces versements ont diminué en raison du financement en capitaux propres inférieur de la Ville.

· Total du service de la dette : tous les frais du service de la dette de la Ville ont diminué en raison du coût plus faible de l’emprunt de la Ville.

· Impôts fonciers : le total des impôts fonciers prévus a augmenté à la fois sur une base de valeur nominale et sur une base de valeur actualisée, comme on l’a vu ci-dessus.

En résumé, d’après les changements énumérés ci-dessus, les impôts fonciers nets requis pour réaliser la neutralité des recettes de la Ville sont passés de 13 à 6 % sur une base de valeur nominale, et de 37 à 27 % sur une base de valeur actualisée.

Background

On 28 June 2010, Council approved the Lansdowne Partnership Plan and Implementation report (Ref N°: ACS2010-CMR-REP-0034) authorizing staff to proceed with Stage 2 of the revitalization of Lansdowne and directing staff to proceed with the implementation of the Lansdowne Partnership Plan (LPP) through the initiation of the required planning approval processes. Council direction included having the three major components of the redevelopment brought together into a single Integrated Site Plan through the City’s two stage site plan approval process.

At the June 2010 meeting, Council also approved the Lansdowne – Results of the RFP Process – Exhibition Hall Facility report (Ref N°: ACS2010-CMR-REP-0033) authorizing the City Manager to negotiate and execute an agreement with the Shenkman Corporation for the design, construction, operation and financing of a trade show and exhibition hall facility. These agreements have been completed and the required zoning adopted by Council on 6 October 2010, as per Motion 97/16 approved by Council on 22 September 2010. Shenkman Corporation also obtained the required funding for the project. The construction of the trade show and exhibition hall facility is currently underway and is tracking on time and on budget. The facility is scheduled to be operational this fall.

As a result, it is the opinion of Legal Services that the requirements set out in Motion No. 92/22 that passed at the June 2010 meeting have been fulfilled, thus satisfying the condition precedent under the Motion for the closing of the Project Agreements for the Lansdowne Partnership Plan. Consequently, by way of this report, and in reliance upon a separate opinion from Legal Services, the City Manager certifies to Council that the requirements imposed on each of the City and Shenkman Corporation under Motion No. 92/22 have been fulfilled.

On 7 September 2010, the Corporate Services and Economic Development Committee (CSEDC) approved the Request for Offers – Air Rights of Residential and Office Components of the Lansdowne Partnership Plan Implementation report (Ref N°: ACS2010-CMR-REP-0045). This report initiated a two-stage process to facilitate the lease or sale of the air rights over the proposed mixed-use and retail development. The two-stage process includes a Request for Expression of Interest (REOI) followed by a Request for Offers (RFO). The Terms of Reference contained in the air rights report were amended by the Corporate Services and Economic Development Committee (CSEDC) to indicate that the “preferred option for the City would be to lease the air rights at Lansdowne Park and that the sale of air rights be considered a secondary option”. A report on the findings of the Stage One REOI and the RFO process for the lease or sale of the air rights at Lansdowne Park is being considered by the Finance and Economic Development Committee (FEDCO) at its meeting of 18 August 2011.

On 26 September 2010, Council approved the Zoning – Lansdowne Park (Lansdowne Partnership Plan) report (Ref N°: ACS2010-ICS-PGM-0154) and on 6 October 2010, through Motion 98/13, enacted Zoning By-law 2010-329 to repeal By-law No. 2010-314 and to amend By-law No. 2008-250 to change the zoning of lands as per the Planning and Environment Committee (PEC) Agenda 80, Item 5, Report Reference Number ACS2010-ICS-PGM-0154.

On 19 November 2010, Council approved the Site Plan Control – Integrated Site Plan – Lansdowne Partnership Plan (File No. D07-12-10-0220) report (Ref N°: ACS2010-ICS-PGM-0209) subject to the standard and special conditions set out in Document 6 of that report.

On 8 December 2010, Council, as Committee of the Whole, approved Motion 8/9 which authorized an additional $17 million in capital authority for the acceleration of the reconstruction of Bank Street between Holmwood Avenue and the Queensway. The reconstruction of Bank Street is on schedule and on budget. A summary of the activity of the Bank Street Reconstruction Advisory Committee and engagement with the community is provided under the Consultation section of this report.

The Minutes of Settlement resulting from the Ontario Municipal Board (OMB) mediation sessions held in March 2011 were subsequently endorsed by Planning Committee on 12 April 2011 and Council on 13 April 2011, and included the following modifications:

· Elimination of mid-rise residential buildings along Holmwood Avenue;

· Reduction in the height of the residential tower at Bank and Holmwood;

· A cap of 280 total residential units;

· Restrictions on vehicular access to Lansdowne from Holmwood Avenue; and

· Collaboration between the City and community groups on traffic and parking issues.

This past May, the OMB heard the remaining appeals, filed by three individuals. The Board reviewed the evidence tendered and rendered its decision on 15 June 2011. The final decision of the OMB dismissed the appeals and gave approval to the modified zoning by-law. The OMB decision fulfils one of the conditions precedent to finalizing the site plan approval as directed by Council on 19 November 2010.

City staff has been working with the Ottawa Sports and Entertainment Group (OSEG) to implement the recommendations and motions approved by Council associated with the June, September and November 2010 reports.

DISCUSSION

The purpose of this report is to provide a status update on work completed to date and recommendations related to adjustments to the project schedule and associated spending plan to facilitate the successful continuation of the implementation of the Lansdowne redevelopment within the existing Council approved budget allocations.

The status update contained in the report from Graham Bird and Associates (GBA) attached as Document 1 of this report focuses on the following areas:

· Planning – Site plan development, process and approvals;

· Project schedule and associated spending plan;

· Retail leasing program; and,

· Financial pro forma and assumptions.

Planning – Site Plan Development, Process and Approvals

The integrated project team (the City and OSEG) has been working to meet the various site plan conditions required by Council in November 2010. The project team has focused on the development of numerous design documents which set out guidelines, principles and directions for the design detailing that will be integrated into the final site plan and implemented through the detailed design work required to prepare tender documents and building permit plans.

This effort has brought the various design and consultant teams together into a single cohesive design team to focus the significant effort that has gone into moving forward with the work required to finalize the site plan approval. This effort will continue through the final detailed design work that will occur during the implementation phase. This will ensure that the design details to be implemented are based on the final approved plans. The guidelines, directions, and strategies will continue to be coordinated and will accommodate the various needs and requirements of the different disciplines to achieve full integration amongst all components of the project within a framework that achieves the highest design standards possible.

The work undertaken to date has resulted in the development of a final site plan which the LDRP is conditionally approving with the exception of the conceptual architecture plan which is still evolving. As part of the final site plan, the LDRP has approved the comprehensive guidelines, strategies and directions Design Manual that was developed to respond to the conditions set out in the November Site Plan report as conditions to be satisfied prior to finalizing the site plan.

Lansdowne Design Review Panel (LDRP) and Urban Design Review Panel (UDRP) Process

As noted, the LDRP is conditionally approving the final plans that Council mandated they be the final review authority for, and has approved the guidelines, strategies and directions contained in the Design Manual to guide implementation. The LDRP has retained its review role for finalizing and signing off on the details for the landscaping plan prior to tender documents being released.

The continued role of the LDRP and timelines for finalizing the LDRP reviews and approval of final plans has been confirmed with the LDRP within the modified project schedule for project implementation.

Ottawa Farmers’ Market

Since its inception as a two-year pilot program in 2006, the Ottawa Farmers’ Market (OFM) has successfully proven itself to be a valued part of the Ottawa region – so much so the City renewed the program in 2008 and again for another two years in 2010. The OFM is in its sixth successful year of operation at Lansdowne Park and is an integral part of the Lansdowne revitalization.

The City worked with the J.C. Williams Group and the Ottawa Farmers’ Market Board to develop a Memorandum of Understanding (MOU) to address the Market’s vision, product mix, rules and regulations, architectural design and financial arrangement with the City – the goal of which was to ensure a vibrant farmers’ market at Lansdowne Park. The MOU was received by City Council in November of 2010 and is the frame of reference and basis for the OFM and staff negotiations moving forward.

Staff are currently working with the OFM Board on the relocation plan for the 2012/13 seasons and the final designs and infrastructure requirements for Aberdeen Square, the Market’s permanent location at Lansdowne Park. A number of possible locations have been considered for 2012/13 and Brewer Park is seen as the most desirable by the OFM Board. Staff will investigate accommodating this request. The final location will be identified by early fall.

The OFM Board has been consulted by Phillips-Farevaag-Smallenberg (PFS), the firm that is overseeing the Programming Strategy for Lansdowne Park, on the design of and infrastructure requirements for Aberdeen Square. Market stall format and layout have been designed to meet the farmers’ requirements. Trees in a grid pattern were requested by the farmers to provide shade and a green, attractive environment reminiscent of European market squares. The grid design will also provide convenient locations for electrical and water supply for the stalls.

Once the final design and associated operational and financial details have been worked out with the OFM, they will be included in a formal agreement that will be presented to Council for consideration. This agreement will replace the MOU and establish the conditions to ensure the long-term success of the Ottawa Farmers’ Market at Lansdowne Park.

Project Schedule and Associated Spending Plan

The completion date for the Lansdowne redevelopment has shifted from the end of 2013 to the fall of 2014. The renewed stadium will be substantially complete by December 2013.

Despite this shift in completion dates the capital budgets allocated for design and construction have remained intact for the stadium and related parking elements. The key reason for the shift in schedule is the delay in the construction start date until the spring of 2012. The shift in the construction start date is attributable to delays resulting from the Friends of Lansdowne (FOL) legal challenge, the extended timeframe required to complete of the OMB Appeal and the recommendation to shift from being ‘permit ready’ prior to construction to being ‘permitted, tendered and contracted’.

The shift from permit ready to permitted, tendered and contracted is significant as the designs are near-complete design packages (95% design development) which are ready to be constructed whereas permit ready are much less defined (usually 30% design development) and continue to be developed throughout the construction period. The shift in approach will result in the designs being confirmed, costed in detail and contracted prior to construction.

In the summer of 2010, the Friends of Lansdowne (FOL) filed a legal challenge against the City of Ottawa regarding its ability to enter into a partnership with the Ottawa Sports and Entertainment Group (OSEG). As the litigation process evolved it became clear that the court hearing would not occur until the late spring or early summer of 2011, with a right of appeal which could prolong the litigation process until the winter of 2012. As such it became apparent to both partners that it made sense to alter the design development strategy. This shift in approach enables the project to proceed in a positive manner through the completion of the design, tender and final contracts for each of the components (the stadium, arena, parking garage, retail, residential, office and urban park) of the Lansdowne redevelopment anticipated to conclude by late winter of 2012 coincident with the potential litigation process should an appeal by filed by the FOL.

Further this approach enables the project teams to focus on development, environmental, heritage, integrated site plan and design approvals in the event that an appeal by the FOL were to proceed. Under this approach the timeline to complete the partnership agreements and the waiving of conditions is extended, however, the result is a reduction in risk and the completion of the stadium, parking and site designs. The City retains the rights to the stadium and parking designs, being managed by OSEG on its behalf, should the partnership not proceed. Moreover, this enables the leasing efforts to proceed in accordance with the retail strategy approved by Council strengthening the successful revitalization of Lansdowne.

Lansdowne Park Revitalization Schedule

The included project schedule as set out in Document 1 to this report outlines the key activities and milestones through the design development and subsequent construction phase of the project. The Stage 2 design development phase is scheduled to continue until late spring 2012 and Stage 3 construction to begin June 2012.

The core design development of the stadium, parking garage, retail, site servicing infrastructure, Horticulture Building and urban park will be complete by late 2011 so that the process of permitting, tendering and contracting can be initiated through the winter of 2012.

Additional activities taking place throughout Stage 2 include finalizing subsequent conditions on the site plan such as refinement and implementation of a detailed lighting plan, advancing the Transportation Demand Management (TDM) and operations plans to their final form, developing the detailed signage and wayfinding plans which will be brought forward to Planning Committee in November 2011 as a requirement to waiving of the signage by-law, finalizing engineering approvals and refining the building architecture.

Additional activities which relate to both design development and meeting the subsequent conditions of site plan such as on-going monitoring of the implementation of the Council approved Retail Strategy, accessibility and sustainability compliance review of detailed designs and cost control analysis will also be completed.

Stage 2 concludes with the issuance of tender documents and receipt of the various permits required to initiate construction and the closing of the project agreements.

The Stage 3 construction schedule remains similar to the schedule approved in June 2010 in terms of the duration of the construction period. Stadium construction and major garage excavation commences in June 2012, this includes the necessary preparation for the relocation of the Horticulture Building. Construction of civil servicing considerations occurs concurrently throughout the site, including the rough grading of the urban park area.

By the winter of 2013 major construction begins for the mixed-use commercial and residential blocks, with building envelopes completed by the fall of 2013 and internal fit-up completed by the summer of 2014. This includes the office and residential portions to be undertaken by Request for Offers (RFO) Air Rights developers. Following completion of the parking garage, the landscaping and major works for the urban park will take place in the spring of 2014 and are anticipated to be substantially complete by the fall of 2014 with full completion scheduled for the summer of 2015. Substantial completion of the north and south side stands will occur by December 2013.

The current project schedule enables the Canadian Football League (CFL) and North American Soccer League (NASL) team to be fully operational by the spring of 2014.

Scheduling Considerations

Removal of Contaminated Soils

Lansdowne currently contains areas of contaminated soil which will be handled appropriately through the redevelopment in accordance with the Ministry of Environment (MOE) policies and regulations. Within the proposed mixed-use area on the northern portion of the site, there is an existing section of contaminated soil which will ultimately be excavated through the construction of the parking garage and as much contaminated soil as possible is to be relocated to create the berm along the newly constructed south side stands.

In order to ensure that the project falls under the existing MOE legislation related to Record of Site Condition, the relocation of these soils must take place as early as possible following legal close in the spring of 2012. If legal close is delayed beyond 30 June 2012, it is recommended that the City undertake the work to relocate the contaminated soil to the berm ahead of close to ensure that the timelines set out by the MOE are respected. This will ensure that the project implementation scheduled is maintained. It is therefore recommended that the City proceed with this by the spring of 2012 whether legal close has been achieved or not.

The work to complete the necessary soil remediation, including consultant fees, is projected to be $400,000. These costs were included within the existing Council approved capital budget for the Lansdowne redevelopment.

South Side Stands Demolition

Upon examining the scheduling options for the demolition of the south side stands, it is recommended that this task be undertaken ahead of close in order to accelerate the schedule. This includes pre-qualification of implosion and demolition contractors, preparation of demolition specifications, tender and demolition contract award and the necessary clean-up work. The key benefits of this is a savings of approximately four (4) months in the revised project schedule achieved by allowing the stadium General Contractor to commence work on the foundation of the new south side stands immediately following legal close. It also allows for additional cost savings as most of the concrete work can take place before the winter months and therefore avoid a large portion of the winter construction cost. This would allow for substantial completion of the stadium by December 2013. However, this does require advancing a financial commitment of approximately $1.5M prior to close. These costs were included within the existing Council approved capital budget for the Lansdowne redevelopment.

Horticulture Building

To facilitate the work related to the relocation of the Horticulture Building, it is recommended that the pre-ordering of steel and equipment required for the relocation be undertaken prior to legal close. The primary reason for this is the significant lead time required for tender, delivery and fabrication of materials and specialized equipment necessary to complete the move. If this pre-ordering does not occur until after legal close in the spring of 2012, it will have an impact on the parking garage and retail building construction schedule as a result of the coordination required during the physical relocation of the building. The financial commitment required prior to close is estimated at approximately $1M. These costs were included within the existing Council approved capital budget for the Lansdowne redevelopment.

Building Permits

As per the requirement of the City of Ottawa, the Building Permit Fee of $910,000 for the stadium, arena and parking must be submitted with the applications. This must be done prior to the close of the partnership in December 2011. These costs were included within the existing Council approved capital budget for the Lansdowne redevelopment.

Spending Plan

The following outlines the revised anticipated soft cost expenditures by the City and OSEG throughout the Stage 2 Implementation Phase and Stage 3 Construction. The budgets are broken down by original June 2010 budget, revised current budget and remaining project costs. The original Stage 2 costs budgeted for both the City and OSEG were $6.5M each until close in June 2011. The revised projected costs to be spent prior to close by the City have increased to approximately $21M. OSEG’s total projected expenditures for Stage 2 have increased to approximately $10.9M. Although this change is significant, there are a number of reasons for the increase in the projected expenditures during Stage 2 Implementation.

These are costs which fall under the overall project budget, and therefore do not reflect an increase in total project budget. In the original June 2010 budget, these costs would have been spent across Stage 2 and Stage 3; however the change in design development strategy, from permit-ready to permitted, tendered and contracted, results in nearly all of the major detailed design development work by architects and engineers taking place prior to close. This is a significant amount of work. For example, working drawings must be brought up to 95% completion prior to close instead of the 30% reflected in the June 2010 project schedule. This accounts for the bulk of the increase in costs to close.

In addition to this, as the design work progresses, concurrent activity must occur and be integrated into the design elements such as sustainability, accessibility compliance and work to ensure cost control oversight of the designs. Additionally, these costs include expediting major tasks before close to reduce the overall project construction schedule including the demolition of the south side stands, pre-ordering materials and equipment for the Horticulture Building and the potential cost of relocating the contaminated soils. Ultimately, this results in expenditures occurring earlier, but not an overall increase in the associated budget. The City retains ownership of the design products for the stadium and parking, and therefore, the value of the majority of these expenditures in the event that the project agreements do not close.

Cost Sharing Agreement

The cost sharing agreement will assign costs for the following components of the Lansdowne redevelopment:

Stadium;
Parking garage;
Urban park;
Retail;
Residential; and,
Office.

Future Status Updates

· legal agreements;

· governance model;

· formal agreement between the City and the Ottawa Farmers’ Market;

· the urban park programming proposal and costing;

· the Lighting Strategy; and,

· the detailed signage and wayfinding plans.

The partnership agreements will also be before Council in the spring of 2012 for closure prior to commencing construction.

Retail Leasing Program

OSEG continues to work on the retail tenant program. Many local and national prospective tenants have expressed interest in being at Lansdowne. OSEG remains in consultation with John Williams from J.C. Williams Group to ensure that the retail program continues to meet the requirements and expectations described in the June 2010 retail strategy approved by Council.

Financial Pro Forma and Assumptions

· The retail development;

· The stadium and arena; and

· Macro-economic factors.

The Retail Development

· The total development cost per square foot of gross space of the retail development (including the cost of the parking, infrastructure and the contribution to the front lawn) has increased from $290.76 to $319.95. This yields a total capitalized development cost of $127.6 million (up from $98.9 million). The increase in development costs is primarily due to increases in base building costs and to tenant inducements.

Item	June 2010 estimate	August 2011 estimate
Annual cash from retail contributed to the waterfall (after mortgage payments, and vacancies 2014$)	$1.36 M	$2.22 M
Annual taxes contributed to the City (2014$)	$3.48 M	$3.92 M

The Stadium and Arena

Macroeconomic Factors

In addition to those changes described above, certain macroeconomic factors have changed:

· OSEG’s interest rate: As previously described, OSEG’s all-in interest rate has been decreased from 7% to 6.5%.

Impact on Equity and Waterfall Payments

Item	June 2010 estimate	August 2011 estimate	Difference
City’s funding equity	$13.5 M	$2.5 M	-$11.0 M
OSEG’s minimum equity	$30.0 M	$30.0 M	$0.0 M
OSEG’s additional equity	$2.3 M	$15.8 M	$13.5 M

Waterfall summary	August 2011	June 2010	Difference
City Share ($)	$143.3 M	$141.4 M	-$1.9 M
OSEG Share ($)	$101.9 M	$116.3 M	$14.4 M
Total	$245.2 M	$257.6 M	$12.4 M

Summary

	Nominal		NPV
	Jun-10	Aug-11	Jun-10	Aug-11
Avoided costs	$114.0 M	$114.0 M	$48.0 M	$48.0 M
Waterfall payments (excluding payments to the lifecycle reserve)	$84.9 M	$82.9 M	$21.7 M	$21.5 M
Sub total	$198.9 M	$196.9 M	$69.7 M	$69.5 M
Total debt servicing	-$218.8 M	-$208.1 M	-$91.9 M	-$87.7 M
Sub total	-$20.0 M	-$11.2 M	-$22.2 M	-$18.2 M
Property taxes	$155.5 M	$175.6 M	$59.5 M	$67.2 M
Required from taxes	13%	6%	37%	27%

· Avoided costs: unchanged.

· Waterfall payments: payments to the City from the waterfall have decreased both on a nominal and on a present value basis, primarily due to the City’s lower funding equity position.

· Total debt servicing: the City’s total debt servicing costs are lower on a nominal and on a present value basis due to the City’s lower cost of borrowing.

· Property taxes: total expected property taxes have increased both on a nominal and on a present value basis due to the increased rents the retail development is expected to achieve.

RURAL IMPLICATIONS

The Ottawa Farmers’ Market (OFM) will operate at an alternative location for the 2012 and 2013 seasons. Work is progressing to fulfil Council direction with respect to Lansdowne becoming the permanent home of the OFM. A draft of the recommended formal agreement between the City and the OFM will be brought forward to Council for consideration and approval later this year.

CONSULTATION

In June 2010, Council directed staff to implement mechanisms for engagement in the following areas:

the development of the programming proposal for the urban park;
continued engagement with the National Capital Commission (NCC) and Parks Canada;
the Bank Street Reconstruction Advisory Committee (consisting of the Ward Councillor, the Glebe Community Association and the Glebe Business Improvement Area (BIA).

Development of the Urban Park Programming Proposal

A Technical Committee was established and is chaired by Dan Chenier, General Manager, Parks, Recreation and Cultural Services and includes representatives from key City departments to ensure internal coordination in the development of the programming proposal.

Phillips-Farevaag-Smallenberg (PFS) met between November 2010 and March 2011 with numerous community stakeholders to obtain input into the development of the park programming proposal, including representatives from:

Ottawa-Gatineau Film and Television Development Corporation
Rideau Canal Festival
Members of the Festival Network
Algonquin College Events
Ottawa Irish Festival
Dragon Boat Organizers
Ottawa Folk Festival
Ottawa Jazz Festival
Children’s Festival
Community Gardening Network Coordinator for Just Food
Ottawa Farmers’ Market
Ottawa Art Gallery
Glebe Business Improvement Area (BIA)
Glebe Community Association
Ottawa Marathon
Ottawa South Community Association
Commonwealth Historic Resource Management Ltd.
Jill Anholt Studio
Julian Smith & Associates

Urban Park Programming Public Neighbourhood Consultations

Public neighbourhood stakeholder consultations were held in conjunction with the Glebe Community Association on 23 March 2011, and the Old Ottawa South Community Association on 24 March 2011.

Urban Park Programming Public Input through On-line Survey

An online survey was distributed to 115 organizations enabling them to provide their feedback on the urban park programming from 25 May 2011 through 15 June 2011. During this time, these organizations were able to share information and opinions, when responding to the survey.

The consolidated results of public input from all of these forums was considered and influenced the development of the proposed park programming proposal which will be brought forward to Council for consideration subsequent to the LDRP’s consideration and input on the draft programming proposal.

Algonquins of Ontario

A separate process has been established with the Algonquins of Ontario (AOO), Commonwealth Historic Resource Management Limited and PFS to develop the approach for the provision of interpretive elements highlighting and reflecting the culture and history of the Algonquin First Nations that will be integrated with, and form part of, the overall interpretive plan and public art strategy for the site.

Advisory Committees

City staff met the Arts, Heritage and Culture Advisory Committee and the Parks and Recreation Advisory Committee in the spring to provide them with information and obtain input on the public art and programming proposal and answer their questions.

Consultation with the National Capital Commission (NCC) and Parks Canada

The tripartite Steering Committee (comprised of representatives of the City of Ottawa, NCC and Parks Canada that was in place prior to Council approval of the Lansdowne Partnership Plan and Implementation report (Ref N°: ACS2010-CMR-REP-0034) in June 2010 ceased. A new tripartite Committee was struck with a revised mandate focused on key areas including: transportation (including pedestrian and cycling considerations), south side stands, berm and emergency routes, tree protection and integrated site plan considerations. The Committee meets on a monthly basis.

Bank Street Reconstruction Advisory Committee

Preliminary meetings were held 25 August 2010, with the Glebe BIA, Hydro Ottawa and City staff to discuss hydro burial and on 13 October 2010, with representatives of the Glebe Community Association, Glebe BIA, Ward Councillor Doucet, and City staff to discuss the issue of the burial of the hydro wires and the establishment of the Bank Street Reconstruction Advisory Committee (BRAC).

Following the 8 March 2011 Council motion directing the acceleration of the Bank Street reconstruction, a BRAC meeting was held on 24 March 2011. The BRAC serves to disseminate information and provide input into the planning and ongoing implementation of the Bank Street reconstruction. Sub-Committees of the BRAC were established to deal with matters such as the intersection at Bank Street and Wilton Crescent and the Central Park Belvedere. Additionally, Block Captains were established under the auspices of the Glebe BIA. They meet weekly to obtain information and clarification regarding the progress of the reconstruction.

The BRAC is comprised of the following members:

Councillor David Chernushenko

Catherine Henry – Councillor’s Office

Catherine Waters – Glebe Community Association (GCA)

Guy Giguère – GCA

Elizabeth Ballard – GCA

Christine Leadman – Executive Director, Glebe BIA

Allan Bateman – Glebe BIA

Gilbert Russell – Glebe BIA

Greg Best – Glebe BIA

Alex DeVries – Citizens for Safe Cycling

Joe Mojsej – Bank Street Reconstruction Project Lead

John Smit – Manager, Development Review (Urban)

John Wright – Corush Sunderland Wright

David Hatton – IBI Group

David Hook – IBI Group

Ziad Ghadban – Manager, Design and Construction

Wayne Newell – General Manager, Infrastructure Services

Zlatko Krstulich – Transportation Planner

Neil Stout – Program Manager, Municipal Design & Construction

Patrick Dare – Corporate Communications Strategist

Over 21 meetings occurred between March 30, 2011 and August 2011. As of August, Block Captain Meetings occur bi-weekly. Additionally, there are weekly construction progress meetings at the site attended by the contractor, subcontractors, the project manager, the project consultants and City staff.

Ongoing Activity

The following information is available through Ottawa.ca:

The Guiding Principles for the Lansdowne Transformation, prepared by the Lansdowne Strategic Design Review and Advisory Panel;
Historical pictures and design renderings as they became available;
The major project reports, news releases, backgrounder documents, a series of questions and answers, and timelines for the progress of the key work components on the project;
Reports posted include:

§ All of the reports received by standing committees and Council;

§ The heritage studies;

§ The Lansdowne Partnership Plan;

§ Engineering reports;

§ Public consultation findings;

§ A number of reports on transportation, including the extensive terms of reference for a new transportation study;

§ Retail studies, the request for proposals (RFP) for the retail study and market impact analysis peer review;

§ The RFP for a new trade and consumer show facility; and,

§ The RFP for the urban park competition;

The City Manager has issued memorandums to City Council to keep Council members informed about the City’s work on the project and to notify them about upcoming events, news releases and press conferences.

Comments by the Ward Councillor(s)

The implications of this report are city-wide. The ward Councillor is a member of the LDRP however, has not been specifically apprised of the recommendations contained in this report.

LEGAL IMPLICATIONS

There are no legal impediments to approving the recommendations in this Report.

RISK MANAGEMENT IMPLICATIONS

There are risk implications. These risks have been identified and explained in the report and are being managed by the appropriate staff.

FINANCIAL IMPLICATIONS

The total development cost of the stadium, arena and the parking infrastructure remains at $129.3 million as approved by Council in 2010 which was projected to be funded from air rights revenue ($10.2 million) and debt financing ($119.1 million).

As stated in the “Request for Offers Process – Lease or Sale of Air Rights at Lansdowne Park” report, in the event that the net amount from the air rights is not received, the City will be obliged to find other sources to finance the shortfall of the residential component under its contribution requirements to the LPP agreement

Environmental Implications

The conditions for final site plan approval require the development of a sustainability plan and that the overall development and individual buildings strive to achieve the highest possible LEED ND and LEED Building certifications. Also, site remediation is required to address the site contamination confirmed through the Phase I and II Environmental Site Assessment (ESA) and this is also addressed through the conditions of approval. The City is working collaboratively with the Ministry of the Environment (MOE) on a management plan to address the environmental impacts at Lansdowne Park. The redevelopment of Lansdowne will be in full compliance with the Provincial Environmental Protection Act.

To ensure that the sustainability objectives that have been established will be achieved, the sustainability strategy sets out a process whereby the detailed design development and construction would be undertaken through a compliance review process and through either a formal certification process (such as LEED ND or LEED Building certification) or a more informal process where a third party sign off is provided confirming that elements to achieve a LEED ND or LEED Building target have been met.

Included in the standard conditions of the site plan approval given by Council in November 2010, is a requirement for site remediation to address the existing contamination that resulted from historical use at the site, most notably seepage of coal dust into the soil as a result of historical use of coal for heating and a landfill area where inert construction materials were deposited to fill in a portion of the historical inlet that extended into Lansdowne from the Rideau Canal.

The MOE has been consulted regarding the City’s proposed management plan to address these site contamination matters to meet MOE requirements. The coal dust impacted soils are at the front of the Horticultural Building, in the vicinity of the former Coliseum Annex Building, with the closed landfill, located at the eastern portion of the site. From a technical perspective, the impacted soils include polynuclear aromatic hydrocarbons (PAH), heavy metals and petroleum hydrocarbons at concentrations exceeding the generic Table 3 MOE 2009 Standards for residential/parkland/institutional property use.

As reported to Council in June 2010, and as required under the standard conditions of site plan approval given by council, a Record of Site Condition will be filed with the MOE to address the impacts in the areas of the Horticultural Building and former Coliseum Annex Building.

The original approach for the urban park identified the preparation of a due diligence risk assessment, however, after further consultation with the MOE, a formal Human Health and Ecological Risk Assessment and Record of Site Condition will be submitted to the MOE to address the impacts in the urban park area including the former landfill area as well as the encapsulation of impacted soils within the south side berm. The management plan that has been developed provides a sustainable approach to Brownfield redevelopment and will achieve LEED credits for an effective remediation approach.

City Strategic Plan

The Lansdowne Partnership Plan and revitalization initiative relate to the following:

Sustainable, Healthy and Active City

Objective 3 – Expand the amount of City-owned green space in Ottawa
Objective 6 – require walking transit and cycling oriented communities and employment centers

Planning and Growth Management

Objective 1 – Manage growth and create sustainable communities by:

Becoming leading edge in community and urban design
Ensuring that new growth is integrated seamlessly with established communities
Ensuring that new community facilities are built in tandem with new development

SUPPORTING DOCUMENTATION

Document 1: Lansdowne Partnership Plan Implementation Status Report - Graham Bird and Associates (GBA)- Issued separately and held on file with the City Clerk

DISPOSITION

Subject to Council approval, staff will implement the recommendations as outlined in the report.

The City Manager’s Office will ensure that status updates are provided to Council as set out in this report.