August Report Final August 11

8/6/2019 August Report Final August 11

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Report to/Rapport au :

Finance and Economic Development Committee /Comit des finances et du dveloppement conomique

18 August 2011 / le 18 aot 2011

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

Contact Person/Personne ressource : Gordon MacNair, Director, Real Estate Partnershipsand Development Office/Directeur, Partenariats et Dveloppement en immobilier

(613) 580-2424 x 21217, [email protected]

City Wide Ref N: ACS2010-CMR-REP-0027SUBJECT: LANSDOWNE PARTNERSHIP PLAN IMPLEMENTATION STATUS

UPDATE

OBJET : MISE JOUR SUR LTAT DAVANCEMENT DE LA MISE ENUVRE DU PLAN DE PARTENARIAT DE LANSDOWNE

REPORT RECOMMENDATIONS

That the Finance and Economic Development Committee recommend Council:

1. Receive the Lansdowne Partnership Plan Implementation Status Update report and

approve the timing for subsequent status updates as outlined in this report;

2. Confirm that the role of the Urban Design Review Panel (UDRP) in the LansdowneStage 2 site plan approval be to review the final architectural plans for the air rightsdevelopments based on the conceptual plans and directions established by theLansdowne Design Review Panel (LDRP) as described in this report and furtherthat the UDRP provide the comments generated by their review to the GeneralManager of Planning and Growth Management;

3. 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-sharingagreement with the Ottawa Sports and Entertainment Group (OSEG) on behalf ofthe City that is reflective of the spending plan as described in this report and withinthe approved budget envelopes for the Lansdowne redevelopment.


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RECOMMANDATIONS DU RAPPORT

Que le Comit des finances et du dveloppement conomique recommande au Conseil :

1. de recevoir le rapport de compte rendu sur la mise en uvre du Plan de partenariatdu parc Lansdowne et dapprouver lchancier des prochains comptes rendus, tel

quindiqu dans le prsent rapport;

2. de confirmer que le rle du Comit dexamen du design urbain dans le cadre delapprobation de la phase 2 du plan dimplantation de Lansdowne soit dexaminerles plans darchitecture finaux relatifs lamnagement des droits ariens axs surles plans de conception et les orientations tablis par le Groupe consultatif et dervision stratgique de la conception du parc Lansdowne, comme le dcrit le prsentrapport, et ensuite, que le Comit dexamen du design urbain fournisse lescommentaires gnrs la suite de son examen au directeur gnral dUrbanisme etGestion de la croissance;

3. dapprouver la version rvise du calendrier du projet et du plan des dpenses,comme lexplique le prsent rapport;

4. de dlguer le pouvoir au directeur municipal afin quil ngocie et conclue uneentente de partage des cots avec le Ottawa Sports and Entertainment Group(OSEG), au nom de la Ville dOttawa, qui reflte le plan des dpenses tel que dcritdans le prsent rapport et qui respecte lesenveloppes budgtaires approuves pourle projet de ramnagement du parc Lansdowne.

EXECUTIVE SUMMARY

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 therevitalization of Lansdowne and directing staff to proceed with the implementation of theLansdowne Partnership Plan (LPP) through the initiation of the required planning approvalprocesses.

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

The status update report from Graham Bird and Associates (GBA) attached as Document 1 ofthis 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.


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Each of these areas is covered in detail in the GBA report. This Executive Summary highlightsthe key considerations contained in the GBA report and the rationale for the recommendationscontained 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 planconditions required by Council in November 2010. The project team has focused on thedevelopment of numerous design documents which set out guidelines, principles and directionsthat will be integrated into the final site plan and implemented through the detailed design workrequired 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 LDRPis conditionally approving with the exception of the conceptual architecture plan which is stillevolving. 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 conditionsset out in the 19 November 2010 Site Plan Control Integrated Site Plan LansdownePartnership Plan (File No. D07-12-10-0220) report(Ref N: ACS2010-ICS-PGM-0209) reportprior 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 finalreview authority for, and has approved the guidelines, strategies and directions contained in theDesign Manual to guide implementation. The LDRP has retained its review role for finalizingand 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 planson a building-by-building basis. The role of the UDRP is proposed to provide review andcomment to staff on the final architectural plans for the air rights developments based onconcepts reviewed and signed off on by the LDRP.

The continued role of the LDRP and the timelines for finalizing the LDRP reviews and approvalof 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 2013to 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 constructionhave remained intact for the stadium and related parking elements.


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Lansdowne Park Revitalization Schedule

The project schedule as set out in Document 1 to this report outlines the key activities andmilestones 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 andreceipt of the various permits required to initiate construction and the closing of the projectagreements.

By the winter of 2013 major construction begins for the mixed-use commercial and residentialblocks, with building envelopes completed by the fall of 2013 and internal fit-up completed bythe summer of 2014. This includes the office and residential portions to be undertaken byRequest for Offers (RFO) Air Rights developers. Substantial completion of the north and southside stands will occur by December 2013. Following completion of the parking garage, thelandscaping and major works for the urban park will take place in the spring of 2014 and areanticipated 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 of2014.

The elements of the schedule that are being recommended for completion prior to close of thepartnership 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 inJune 2011. The revised projected costs to be spent prior to close by the City have increased toapproximately $21M. OSEGs total projected expenditures for Stage 2 have increased toapproximately $10.9M. Although this change is significant, this report details the reasons for theincrease 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 Stage3; however the change in design development strategy, from permit-ready to permitted, tenderedand contracted, results in nearly all of the major detailed design development work by architectsand 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


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was what was assumed in the June 2010 project and spending plans. This accounts for the bulkof the increase in costs to close.

In addition to this, as the design work progresses, concurrent activity must occur and beintegrated into the design elements such as sustainability, accessibility compliance and work toensure 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 ofthe south side stands, pre-ordering materials and equipment for the Horticulture Building and thepotential cost of relocating the contaminated soils. Ultimately, this results in expendituresoccurring earlier, but not an overall increase in the associated budget. The City retains ownershipof the design products for the stadium and parking and therefore the value of the majority ofthese 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 Lansdowneredevelopment:

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

The cost sharing of capital (and operating) costs for Lansdowne will vary depending on thenature 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 certaincomponents depending on the nature of the costs and which partner benefits or requires the coststo occur. The First and Second Cost Sharing Agreements which were approved by Council on 28June 2010, have expired due to the passage of time. It is therefore prudent and necessary that anew Cost Sharing Agreement be entered into by the parties to take them through to the closing ofthe Project Agreements.

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

Future Status Updates

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

legal agreements; governance model;


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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 tocommencing construction.

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

Retail Leasing Program

OSEG continues to work on the retail leasing program. Many local and national prospectivetenants 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 theJune 2010 retail strategy approved by Council.

Financial Pro Forma and Assumptions

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

The financial outlook for the City of Ottawas interest in the Lansdowne transformation has beenchanged by a number of developments and updated assumptions to the variables in the projectfrom 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 Citys totalpayments, and the extent to which this project is revenue neutral for the City. The affectedcomponents 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 atapproximately 360,000 square feet of leasable space, with a requirement to build 360 parkingstalls, fund infrastructure, common space and to contribute $2.5 million to the urban park budget.Changes are as follows:

The Citys share of property taxes that are expected to be generated from the Lansdownedevelopment in 2014 have increased from $3.48 million to $3.92 million. The increase isdue to the higher anticipated net operating income of the retail development. We note thatprior to close, an independent tax assessment of the retail development will be conducted,


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which will form the basis for the calculation of the Citys final funding equity included inthe closed system.

In June 2010 the retail development contained approximately 45,000 square feet ofintegrated 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. Thischange affects both the net cash flow into the waterfall and the calculation of the Citys

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 basebuilding costs and to tenant inducements.

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

OSEGs equity contributed to fund the retail (the difference between the totaldevelopment 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 ofthe 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 thefollowing table:

Item June 2010estimate

August 2011estimate

Annual cash from retail contributed tothe 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 $129.3million. No changes are anticipated to the operating pro forma from those presented in June2010, 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 beenimpacted. The inflationary cost pressure on the stadium, arena and parking was reviewedby the Citys project manager and it was concluded that this can be accommodated within


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the Citys capital budget of $129.3 million. The increased cost pressure on the retaildevelopment has been included in the higher development costs seen above. During theoperating period, both costs and revenues are subject to inflation, thus one is expected topartially offset the other such that the inflationary impact of opening in 2014 is notbelieved to present downside risk to the cash flows from the projects operations.

OSEGs interest rate: As previously described, OSEGs all-in interest rate has been

decreased from 7% to 6.5%. The Citys interest rate: The Citys 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 Citys cost of borrowing andfunding 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 Citys funding equity,OSEGs additional equity, and the total returns both parties expect to receive through the

operating period, as shown below:


August 2011estimate

Difference

Citys funding equity $13.5 M $2.5 M -$11.0 M

OSEGs minimum equity $30.0 M $30.0 M $0.0 M

OSEGs additional equity $2.3 M $15.8 M $13.5 M

The impact of increasing OSEGs additional equity and decreasing the Citys funding equity,along with higher rents from the retail development, have changed the expected payments from

the waterfall to each party, as shown below:


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Waterfall

L1 -Additions

to Lifecycle

Waterfall

L2 -Distribution

s to OSEG -

Waterfall

L2 -Distribution

s to City -return on

Waterfall

L3 -Returnof

Additional

Waterfall

L4 -Returnof Equity -

Waterfall


Waterfall

L5 -Distribution


Wat

LDistri

s to O

Aug-11 $58.4 M $51.0 M $4.0 M $15.8 M $30.0 M $2.5 M $57.0 M $19.4 M $19.4 M

Jun-10 $58.4 M $69.7 M $29.9 M $2.3 M $30.0 M $13.5 M $41.5 M $.0 M $.0 M

$.0 M

$10.0 M

$20.0 M

$30.0 M

$40.0 M

$50.0 M

$60.0 M

$70.0 M

$80.0 M

ons

Total waterfall payments are expected to increase from approximately $245.2 million to $257.6million, a difference of $12.4 million. OSEGs expected payments are expected to increase by$14.4 million, reflecting returns on the increase in additional equity of $13.5 million. The Cityspayments are expected to decrease by approximately $1.9 million reflecting lower returns giventhe reduction in the Citys 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 MTotal $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 andmaintaining the stadium and arena, waterfall payments, debt servicing costs, and the netrequirement from retail and office property taxes on the Lansdowne site, both on a nominal andon a present value basis.

Nominal NPVJun-10 Aug-11 Jun-10 Aug-11

Avoided costs $114.0 M $114.0 M $48.0 M $48.0 MWaterfall payments(excluding paymentsto the lifecyclereserve)

$84.9 M $82.9 M $21.7 M $21.5 M


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Sub total $198.9 M $196.9 M $69.7 M $69.5 MTotal 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 MProperty taxes $155.5 M $175.6 M $59.5 M $67.2 MRequired 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 Citys lower funding equityposition.

Total debt servicing: the Citys total debt servicing costs are lower on a nominal and on apresent value basis due to the Citys lower cost of borrowing.

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

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

SOMMAIRE

Le 28 juin 2010, le Conseil a approuv le rapport sur la mise en uvre duPlande partenariat du parc Lansdowne (N de rfrence : ACS2010-CMR-REP-0034) qui autorise le personnel entamer la phase 2 du projet de revitalisation du parc Lansdowne, et qui enjoint le personnel entreprendre la mise en uvre du Plan de partenariat du parc Lansdowne (PPPL) par lamorce

des processus ncessaires lapprobation des plans.

Lobjet du prsent rapport est de fournir une mise jour de ltat davancement des travauxachevs ce jour, et davancer des recommandations quant au calendrier du projet et au plan desdpenses sy rapportant en vue de faciliter la mise en uvre russie de projet de ramnagementdu parc Lansdowne, en respectant les allocations budgtaires approuves par le Conseil.

Le rapport de mise jour de ltat davancement du projet de Graham Bird and Associates(GBA), annex au prsent rapport en tant que Document 1, aborde les lments suivants :

Planification laboration, processus et approbations du plan

dimplantation; Calendrier du projet et plan des dpenses sy rapportant; Programme de location pour la composante de commerce de dtail; et, Pro forma et hypothses financires.

Le rapport de GBA aborde chacun de ces lments de faon dtaille. Le prsent sommaireexpose les grandes lignes des considrations cls prsentes dans le rapport de GBA, et lajustification des recommandations formules dans le prsent rapport.


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Planification laboration, processus et approbations du plan dimplantation

Approbation du plan dimplantation

Lquipe de projet intgre (la Ville et lOSEG) saffaire depuis un certain temps satisfaire aux

diffrentes conditions exiges par le Conseil au mois de novembre 2010. Lquipe du projet auvr sur llaboration de plusieurs documents portant sur la conception qui tablissent deslignes directrices, des principes et des directives qui seront intgrs au plan dimplantationdfinitif, et mis en uvre par lentremise de travaux conceptuels dtaills requis pour la prparation de documents dappel doffres et de plans pour lobtention de permis deconstruction.

Les travaux entrepris ce jour se sont solds par la production dun plan dimplantation dfinitifapprouv de faon conditionnelle par le Groupe consultatif et de rvision stratgique de laconception du parc Lansdowne, lexception du plan darchitecture conceptuelle que lonpeaufine de faon continue. Un manuel de conception a t approuv par le Groupe consultatif et

de rvision stratgique de la conception du parc Lansdowne et fera partie intgrale du plandimplantation dfinitif. Ce manuel comprend dans leur intgralit les lignes directrices, lesstratgies et les directives labores afin de rpondre aux conditions nonces dans le rapport du19 novembre 2010 Vrification du plan dimplantation plan cadre dimplantation intgr plan de partenariat du parc Lansdowne (No de dossier D07-12-10-0220) (N de rfrence :ACS2010-ICS-PGM-0209) avant lobtention du plan dimplantation dfinitif.

Processus du Groupe consultatif et de rvision stratgique de la conception du parc Lansdowneet du Comit de rvision de la conception urbaine

Le Groupe consultatif et de rvision stratgique de la conception du parc Lansdowne approuve

de faon conditionnelle les plans dfinitifs pour lesquels le Conseil lui a octroy le pouvoir finalde dcision, et a approuv les lignes directrices, les stratgies et les directives figurant dans lemanuel de conception afin de faciliter le processus de mise en uvre. Le Groupe consultatif et dervision stratgique de la conception du parc Lansdowne continuera dexercer son rle dervision en ce qui a trait la finalisation et lapprobation des particularits du plandamnagement paysager avant lmission des documents dappel doffres.

On a galement octroy au Groupe consultatif et de rvision stratgique de la conception du parcLansdowne le pouvoir final de dcision et de rvision des plans architecturaux dfinitifs pourchaque btiment. Le rle propos du Comit de rvision de la conception urbaine consiste assurer la rvision et offrir une rtroaction au personnel lgard des plans architecturaux

dfinitifs pour lexploitation des droits ariens, en sappuyant sur les concepts rviss etapprouvs par le Groupe consultatif et de rvision stratgique.

Le rle continu du Groupe consultatif et de rvision stratgique de la conception du parcLansdowne, et le calendrier rgissant les rvisions et lapprobation finale des plans dfinitifs parle Groupe consultatif lui ont t confirms dans le cadre de llaboration du calendrier du projetmodifi.


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Calendrier du projet et plan des dpenses sy rapportant

La date dachvement du ramnagement du parc Lansdowne a t reporte de la fin de 2013 lautomne 2014. Le stade rnov sera fonctionnel au printemps 2014, au lieu de lautomne 2013,comme prvu lorigine. Malgr le dcalage des dates dachvement des travaux, les budgetsdimmobilisation allous pour la conception et les travaux de construction du stade et des

composantes de stationnement sy rattachant sont demeurs intacts.

Calendrier de la revitalisation du parc Lansdowne

Le calendrier du projet tel qunonc dans le Document 1 du prsent rapport permet un aperudes activits et des tapes importantes cls tout au long de llaboration de la conception et desphases subsquentes de construction du projet.

La phase 2 dveloppement conceptuel est prvue se poursuivre jusqu la fin du printemps2012, et la phase 3 travaux de construction doit dbuter en juin 2012. La phase 2 se solderapar lmission de documents dappels doffres et de reus pour les diffrents permis requis pour

amorcer les travaux de construction et pour conclure les ententes du projet.

Les travaux de construction majeurs des composantes commerciales et rsidentielles utilisationmixte sont prvus pour lhiver 2013. La construction des enveloppes des btiments doit treacheve lautomne 2013, alors que les travaux damnagement intrieur seront mens termeavant lt 2014. Cela comprend les bureaux et les logements pour lesquels on procdera desdemandes de propositions (DP) pour les droits ariens. Les gradins du ct nord seront en grandepartie achevs avant dcembre 2013, et les gradins du ct sud avant dcembre 2013. Suite lachvement du garage de stationnement, lon procdera aux travaux damnagement paysageret aux travaux denvergure visant le parc urbain au printemps 2014. Ces travaux devraient tre engrande partie termins lautomne 2014, et leur achvement est prvu lt 2015. Le calendrier

de la phase 3 travaux de construction permettrait lquipe de la Ligue canadienne defootball (LCF) et lquipe de la North American Soccer League (NASL) dtre entirementfonctionnelles avant au printemps 2014.

Parmi les lments du calendrier pour lesquels on recommande lachvement avant la conclusiondu partenariat, on retrouve :

Lachvement de la conception du stade, de larna et du garage de stationnement; Le retrait des sols contamins; La dmolition des gradins du ct sud; Lachat de lacier et de lquipement devant servir au dmnagement de ldifice de

lHorticulture; et, Lachvement du processus de demandes de permis de construction pour le stade, larna

et le garage de stationnement.

Plan des dpenses

Les cots budgts pour la phase 2 pour la Ville et lOSEG taient de 6,5 M$ chacun, jusqu laconclusion de la phase en juin 2011. Les cots estims rviss devant tre assums par la Ville


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avant la fermeture des comptes pour cette phase ont augment, pour atteindre environ 21 M$.Les dpenses totales estimes pour lOSEG slvent dsormais 10,9 M$. Bien que cetteaugmentation des cots soit considrable, les raisons pour la hausse des dpenses prvues pour lamise en uvre de la phase 2 du projet sont expliques en dtail dans le prsent rapport. Il sagitde cots compris dans le budget global du projet, mais qui ne se traduisent pas par une hausse dubudget total pour le projet.

Dans le budget de juin 2010, on prvoyait dpenser ces cots sur lensemble des phases 2 et 3.Par contre, les modifications effectues la stratgie de dveloppement conceptuel - lesdmarches pour lobtention des permis, lobtention des permis, les appels doffres et loctroi descontrats pour les travaux reprsentent la quasi-totalit des travaux de dveloppementconceptuel dtaills entrepris par des architectes et des ingnieurs, et devant tre achevs avant lafermeture des comptes pour ces phases. Cela reprsente un travail considrable. Prenonslexemple des plans dexcution; ceux-ci doivent tre achevs 95 % avant la conclusion de laphase, au lieu de 30 %, comme prvu lorigine dans les plans du projet et des dpenses, en juin2010. Voil qui explique en grande partie laugmentation des cots assumer.De plus, pendant le droulement des travaux de conception, les tches simultanes doivent tre

effectues et intgres mme les composantes de la conception, comme la durabilit, laconformit laccessibilit et les travaux effectus afin dassurer le suivi budgtaire en matirede contrle des cots lis la conception. Ces cots comprennent galement le contrle dudroulement des travaux denvergure avant la fermeture des comptes, afin dallger le calendrierglobal des travaux de construction du projet, y compris la dmolition des gradins du ct sud, lacommande des matriaux et de lquipement pour ldifice de lHorticulture, ainsi que les cotsventuels pour le dplacement des sols contamins. En fin de compte, cela se traduit par uneaugmentation des dpenses lors des phases initiales du projet, mais ne reprsente pas uneaugmentation globale du budget associ. La Ville conserve la proprit des composantesconceptuelles pour le stade et le garage de stationnement, et par consquent la majorit desdpenses connexes, dans lventualit dune non-conclusion des ententes du projet.

Entente de partage des cots

Lentente de partage des cots attribuera les cots associs aux composantes suivantes duramnagement du parc Lansdowne :

le stade le garage de stationnement le parc urbain la composante de commerce de dtail la composante rsidentielle, et les bureaux

Les cots partager pour les dpenses en immobilisations (et les cots dexploitation) pour leparc Lansdowne sont appels varier selon la nature des dpenses. Certains cots, par exemple,seront rpartis sur lensemble des composantes (le stade, le garage de stationnement, le parcurbain, les composantes de commerce de dtail et rsidentielle, et les bureaux), alors que dautrescibleront des composantes en particulier, dpendamment de la nature des cots, et en fonctiondes besoins des partenaires de ce projet ou des avantages pour eux dassumer ces cots.


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On recommande au Conseil de dlguer au directeur municipal le pouvoir de ngocier et designer, au nom de la Ville, une entente de partage des cots qui reflte le plan des dpenses telque dcrit dans le prsent rapport, et qui se situe lintrieur du cadre budgtaire approuv pourle projet de ramnagement du parc Lansdowne.

Mises jour futures sur ltat davancement

Tout au long du droulement des travaux de mise en oeuvre, le personnel municipal fournira desmises jour priodiques au Conseil sur ltat davancement des composantes figurant dans leplan du projet rvis. Le Conseil recevra une srie de rapports lautomne 2011, y compris :

les ententes juridiques; le modle de gouvernance; lentente formelle entre la Ville et le March des producteurs agricoles dOttawa; la proposition et ltablissement des cots de programmation du parc urbain; et, la stratgie en matire dclairage.

Les ententes de partenariat seront galement dposes devant le Conseil au printemps 2012 envue de leur conclusion avant le dbut des travaux de construction.

De plus, le personnel municipal prsentera un rapport au Conseil le plus tt possible, sil savrequun ou plusieurs des enjeux cibls par les directives de Conseil ou quune tape importante clne pourront tre achevs comme prvu dans le calendrier du projet.

Programme de location pour la composante commerciale

LOSEG poursuit son travail dans le cadre du programme de location pour la composantecommerciale. Plusieurs locataires locaux et nationaux potentiels ont exprim leur intrt davoirun emplacement au parc Lansdowne. LOSEG demeure en consultation avec J.C. WilliamsGroup afin dassurer que les efforts dploys pour la location satisferont aux exigences noncesdans la stratgie de commerce de dtail adopte en juin 2010, et approuve par le Conseil.

Pro forma financier

PriceWaterhouseCoopers (PWC) a t embauch pour effectuer un examen complet et mettre jour les hypothses contenues dans le pro forma de juin 2010. Ce qui suit est tir du rapport dePWC daot 2011 :

Les perspectives financires de lintrt de la Ville dOttawa dans la transformation deLansdowne ont volu en raison dun certain nombre de dveloppements et dhypothsesrvises en ce qui a trait aux variables du projet. La prsente mise jour fournit un rsum descomposants de la transformation de Lansdowne qui sont touchs, de leur effet sur les recettestotales de la Ville et du degr de neutralit des recettes du projet pour la Ville. Les composantstouchs sont :


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le dveloppement du commerce de dtail; le stade et larna; et les facteurs macroconomiques.

Le dveloppement du commerce de dtail

Le dveloppement du commerce de dtail qui doit accompagner le stade et ses alentoursconserve une superficie approximative de 360 000 pieds carrs despace locatif, avec lexigencedamnager 360 places de stationnement, de financer linfrastructure et les espaces communs etde verser 2,5 millions de dollars au budget du parc urbain. Les changements importants sont lessuivants :

Des impts fonciers que doit produire le dveloppement de Lansdowne en 2014 sontpasss de 3,48 3,92 millions de dollars. Cette hausse est due au revenu dexploitationnet prvu plus lev du dveloppement du commerce de dtail. Nous notons quavant laclture, une valuation indpendante du dveloppement du commerce de dtail seraeffectue et servira de base au calcul du financement en capitaux propres rel de la Ville

compris dans le systme ferm. En juin 2010, le dveloppement du commerce de dtail couvrait environ 45 000 pieds

carrs de locaux bureaux intgrs, qui ont depuis t convertis en commerce de dtail.On sattend ce quils rapportent des loyers et des impts fonciers plus levs la Ville.Ce changement affecte le flux de trsorerie net du modle en cascade et le calcul dufinancement en capitaux propres de la Ville.

Le cot total de dveloppement par pied carr despace brut (y compris le cot dustationnement, des infrastructures et de la contribution la pelouse avant) est pass de290,76 319,95 millions de dollars. Il en rsulte un cot de dveloppement capitalistotal de 127,6 millions de dollars (une hausse par rapport aux 98,9 millions de dollarsprvus lorigine). La hausse des cots de dveloppement est due principalement auxhausses des cots de construction de base et des incitatifs aux locataires.

Lhypothque ncessaire pour le financement du commerce de dtail a t tablie 65 %de la valeur du commerce de dtail, soit environ 101,4 millions de dollars. Le tauxdintrt total anticip sur lhypothque a diminu de 7 6,5 %, soit un paiement dequelque 8,2 millions de dollars par an (en supposant un amortissement de 30 ans).

La contribution en capitaux propres de lOSEG au financement du commerce de dtail(lcart entre le cot total de dveloppement et le montant de lhypothque du commercede dtail) est passe de quelque 12,6 26,1 millions de dollars. Cela est d surtout lahausse des cots de dveloppement du commerce de dtail.

Incidence des changements : le cot plus lev du dveloppement du commerce de dtail estcompens par la valeur accrue (comme on la constat dans les loyers plus levs obtenus) et descots de financement moindres, comme le montre le tableau ci-dessous :

Poste valuation dejuin 2010

valuationdaot 2011

Apport annuel en argent comptant ducommerce de dtail au modle en

$1.36 M $2.22 M


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cascade (aprs paiement delhypothque, en $ de 2014)des impts annuels verss la Ville(en $ de 2014)

$3.48 M $3.92 M

Le stade et larna

Le total du cot de dveloppement prvu pour le stade, larna et le stationnement demeure 129,3 millions de dollars. Aucun changement nest prvu dans les pro forma dexploitation parrapport ceux prsents en juin 2010, sauf leffet du dbut dexploitation au dbut 2014 (un anplus tard).

Facteurs macroconomiques

En plus des changements dcrits ci-dessus, certains facteurs macroconomiques ont chang :

Inflation : Le fait de retarder dun an le projet a eu des rpercussions sur les dpenses en

capital et les dpenses dexploitation. On estime que le budget dinvestissement de laVille, qui slve 129,3 millions de dollars, peut accommoder la pression inflationnistesur le cot du stade, de larna et du stationnement. Durant la priode dexploitation, lescots et les recettes sont soumis linflation. On sattend donc ce que les cotscompensent en partie les recettes de sorte que leffet inflationniste dune ouverture en2014 nest pas cens prsenter de risque ngatif important pour le projet.

Taux dintrt de lOSEG : Comme on la dcrit prcdemment, le taux dintrt total delOSEG a diminu de 7 6,5 %.

Taux dintrt de la Ville : le taux crditeur effectif de la Ville (le taux actuel affich parInfrastructure Ontario sur une dbenture entirement amortie en 40 ans) est actuellementde 4,3 %, soit 0,7 % de moins que le taux de 5,0 % prcdemment indiqu dans le pro

forma. Si le taux rel demeure infrieur 5,0 %, le cot demprunt et du financement encapitaux propres de la Ville sera infrieur ceux prsents dans ce rapport.

Impact sur les paiements d'quit et de cascade

Les changements aux hypothses qui entrent dans le calcul des pro forma influent sur lefinancement en capitaux propres de la Ville, les capitaux propres additionnels de lOSEG et lesrecettes totales que les deux parties comptent recevoir au cours de la priode dexploitation,comme suit :

Poste valuation

de juin 2010

valuation

daot 2011

cart

Financement en capitauxpropres de la Ville

$13.5 M $2.5 M-$11.0 M

Capitaux propres minimums delOSEG

$30.0 M $30.0 M$0.0 M

Capitaux propres additionnelsde lOSEG

$2.3 M $15.8 M$13.5 M


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Leffet de laugmentation des capitaux propres supplmentaires de lOSEG et de la diminutiondu financement en capitaux propres de la Ville, ainsi que des loyers plus levs dudveloppement du commerce de dtail a modifi les recettes attendues par chaque partie, commesuit :

Waterfall

L1 -

Additionsto Lifecycle

Waterfall

L2 -Distribution

s to OSEG -

Waterfall

L2 -Distribution


Waterfall

L3 -Returnof

Additional

Waterfall


Waterfall


Waterfall

L5 -Distribution


Wat

LDistri

s to O

Aug-11 $58.4 M $51.0 M $4.0 M $15.8 M $30.0 M $2.5 M $57.0 M $19.4 M $19.4 M

Jun-10 $58.4 M $69.7 M $29.9 M $2.3 M $30.0 M $13.5 M $41.5 M $.0 M $.0 M

$.0 M

$10.0 M

$20.0 M

$30.0 M

$40.0 M

$50.0 M

$60.0 M

$70.0 M

$80.0 M

ons

On sattend ce que le total des versements dans le modle en cascade passe de quelque 245,2 257,6 millions de dollars, soit un cart de 12,4 millions de dollars. On sattend ce que lesrecettes prvues de lOSEG augmentent de 14,4 millions de dollars et que celles de la Villediminuent de 1,9 million de dollars environ. Prire de noter que les retours plus levs delOSEG sont dus en partie au fait que lon sattend ce quil verse des capitaux propressupplmentaires de 13,3 millions de dollars de plus quen juin 2010, dont le retour est refltdans les recettes totales.

Rsum du modleen cascade Aot 2011 Juin 2010 cart

Quote-part de la Ville ($) $143.3 M $141.4 M -$1.9 M

Quote-part de lOSEG ($) $101.9 M $116.3 M $14.4 M

Total $245.2 M $257.6 M $12.4 M


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Rsum

Le tableau suivant montre le total des retours pour la Ville, y compris les cots dexploitation etdentretien vits pour le stade et larna, les versements au modle en cascade, le service de ladette et les exigences nettes des taxes sur le commerce de dtail et les locaux bureaux sur le site

de Lansdowne, la fois sur une base de valeur nominale et sur une base de valeur actualise.

Valeur nominale Valeur actualise

Juin 2010 Aot 2011 Juin 2010 Aot 2011Cots vits $114.0 M $114.0 M $48.0 M $48.0 MVersements au modleen cascade (sauf

paiements la rservedu 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 MTotal du service de ladette

-$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 MImpts fonciers $155.5 M $175.6 M $59.5 M $67.2 MRequis des impts 13% 6% 37% 27%

Cots vits : aucun changement Versements au modle en cascade : ces versements ont diminu en raison du financement

en capitaux propres infrieur de la Ville. Total du service de la dette : tous les frais du service de la dette de la Ville ont diminu en

raison du cot plus faible de lemprunt de la Ville. Impts fonciers : le total des impts fonciers prvus a augment la fois sur une base de

valeur nominale et sur une base de valeur actualise, comme on la vu ci-dessus.

En rsum, daprs les changements numrs ci-dessus, les impts fonciers nets requis pourraliser la neutralit des recettes de la Ville sont passs de 13 6 % sur une base de valeurnominale, et de 37 27 % sur une base de valeur actualise.

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 therevitalization of Lansdowne and directing staff to proceed with the implementation of theLansdowne Partnership Plan (LPP) through the initiation of the required planning approvalprocesses. Council direction included having the three major components of the redevelopment


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brought together into a single Integrated Site Plan through the Citys two stage site plan approvalprocess.

At the June 2010 meeting, Council also approved theLansdowne Results of the RFP Process Exhibition Hall Facility report (Ref N: ACS2010-CMR-REP-0033) authorizing the CityManager 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. Theseagreements have been completed and the required zoning adopted by Council on 6 October2010, as per Motion 97/16 approved by Council on 22 September 2010. Shenkman Corporationalso obtained the required funding for the project. The construction of the trade show andexhibition hall facility is currently underway and is tracking on time and on budget. The facilityis scheduled to be operational this fall.

As a result, it is the opinion of Legal Services that the requirements set out in Motion No. 92/22that passed at the June 2010 meeting have been fulfilled, thus satisfying the condition precedentunder 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 Cityand 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 theLansdowne Partnership Plan Implementation report (Ref N: ACS2010-CMR-REP-0045). Thisreport initiated a two-stage process to facilitate the lease or sale of the air rights over theproposed mixed-use and retail development. The two-stage process includes a Request forExpression of Interest (REOI) followed by a Request for Offers (RFO). The Terms of Referencecontained in the air rights report were amended by the Corporate Services and EconomicDevelopment 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 secondaryoption. A report on the findings of the Stage One REOI and the RFO process for the lease orsale of the air rights at Lansdowne Park is being considered by the Finance and EconomicDevelopment Committee (FEDCO) at its meeting of 18 August 2011.

On 26 September 2010, Council approved the Zoning Lansdowne Park (LansdownePartnership Plan) report (Ref N: ACS2010-ICS-PGM-0154) and on 6 October 2010, throughMotion 98/13, enacted Zoning By-law 2010-329 to repeal By-law No. 2010-314 and to amendBy-law No. 2008-250 to change the zoning of lands as per the Planning and EnvironmentCommittee (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 whichauthorized an additional $17 million in capital authority for the acceleration of the reconstructionof Bank Street between Holmwood Avenue and the Queensway. The reconstruction of BankStreet is on schedule and on budget. A summary of the activity of the Bank Street Reconstruction


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Advisory Committee and engagement with the community is provided under the Consultationsection of this report.

The Minutes of Settlement resulting from the Ontario Municipal Board (OMB) mediationsessions held in March 2011 were subsequently endorsed by Planning Committee on 12 April2011 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 Boardreviewed the evidence tendered and rendered its decision on 15 June 2011. The final decision ofthe OMB dismissed the appeals and gave approval to the modified zoning by-law. The OMBdecision 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) toimplement 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 andrecommendations related to adjustments to the project schedule and associated spending plan to

facilitate the successful continuation of the implementation of the Lansdowne redevelopmentwithin the existing Council approved budget allocations.

The status update contained in the report from Graham Bird and Associates (GBA) attached asDocument 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 planconditions required by Council in November 2010. The project team has focused on thedevelopment of numerous design documents which set out guidelines, principles and directionsfor the design detailing that will be integrated into the final site plan and implemented throughthe detailed design work required to prepare tender documents and building permit plans.


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This effort has brought the various design and consultant teams together into a single cohesivedesign team to focus the significant effort that has gone into moving forward with the workrequired to finalize the site plan approval. This effort will continue through the final detaileddesign work that will occur during the implementation phase. This will ensure that the designdetails 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 andrequirements of the different disciplines to achieve full integration amongst all components ofthe 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 LDRPis conditionally approving with the exception of the conceptual architecture plan which is stillevolving. 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 outin 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 thefinal review authority for, and has approved the guidelines, strategies and directions contained inthe Design Manual to guide implementation. The LDRP has retained its review role forfinalizing and signing off on the details for the landscaping plan prior to tender documents beingreleased.

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

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

Ottawa Farmers Market

Since its inception as a two-year pilot program in 2006, the Ottawa Farmers Market (OFM) hassuccessfully proven itself to be a valued part of the Ottawa region so much so the City renewedthe program in 2008 and again for another two years in 2010. The OFM is in its sixth successfulyear 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 todevelop a Memorandum of Understanding (MOU) to address the Markets vision, product mix,rules and regulations, architectural design and financial arrangement with the City the goal ofwhich was to ensure a vibrant farmers market at Lansdowne Park. The MOU was received byCity Council in November of 2010 and is the frame of reference and basis for the OFM and staffnegotiations moving forward.


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Staff are currently working with the OFM Board on the relocation plan for the 2012/13 seasonsand the final designs and infrastructure requirements for Aberdeen Square, the Marketspermanent location at Lansdowne Park. A number of possible locations have been consideredfor 2012/13 and Brewer Park is seen as the most desirable by the OFM Board. Staff willinvestigate 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 isoverseeing the Programming Strategy for Lansdowne Park, on the design of and infrastructurerequirements for Aberdeen Square. Market stall format and layout have been designed to meetthe farmers requirements. Trees in a grid pattern were requested by the farmers to provideshade and a green, attractive environment reminiscent of European market squares. The griddesign 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 withthe OFM, they will be included in a formal agreement that will be presented to Council forconsideration. This agreement will replace the MOU and establish the conditions to ensure thelong-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 thefall 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 constructionhave remained intact for the stadium and related parking elements. The key reason for the shift inschedule is the delay in the construction start date until the spring of 2012. The shift in theconstruction 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 arenear-complete design packages (95% design development) which are ready to be constructedwhereas permit ready are much less defined (usually 30% design development) and continue tobe developed throughout the construction period. The shift in approach will result in the designsbeing 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 Cityof 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 courthearing would not occur until the late spring or early summer of 2011, with a right of appealwhich could prolong the litigation process until the winter of 2012. As such it became apparentto both partners that it made sense to alter the design development strategy. This shift inapproach enables the project to proceed in a positive manner through the completion of thedesign, 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


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conclude by late winter of 2012 coincident with the potential litigation process should an appealby 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 toproceed. 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 completionof the stadium, parking and site designs. The City retains the rights to the stadium and parkingdesigns, 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 byCouncil 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 activitiesand milestones through the design development and subsequent construction phase of theproject. The Stage 2 design development phase is scheduled to continue until late spring 2012and 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 ofpermitting, tendering and contracting can be initiated through the winter of 2012.

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

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

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

The Stage 3 construction schedule remains similar to the schedule approved in June 2010 interms 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 ofthe Horticulture Building. Construction of civil servicing considerations occurs concurrentlythroughout 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 residentialblocks, with building envelopes completed by the fall of 2013 and internal fit-up completed bythe summer of 2014. This includes the office and residential portions to be undertaken byRequest for Offers (RFO) Air Rights developers. Following completion of the parking garage,


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the landscaping and major works for the urban park will take place in the spring of 2014 and areanticipated to be substantially complete by the fall of 2014 with full completion scheduled forthe summer of 2015. Substantial completion of the north and south side stands will occur byDecember 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 appropriatelythrough 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 anexisting section of contaminated soil which will ultimately be excavated through the constructionof the parking garage and as much contaminated soil as possible is to be relocated to create theberm along the newly constructed south side stands.

In order to ensure that the project falls under the existing MOE legislation related to Record ofSite Condition, the relocation of these soils must take place as early as possible following legalclose in the spring of 2012. If legal close is delayed beyond 30 June 2012, it is recommended thatthe City undertake the work to relocate the contaminated soil to the berm ahead of close toensure that the timelines set out by the MOE are respected. This will ensure that the projectimplementation 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 theLansdowne redevelopment.

South Side Stands Demolition

Upon examining the scheduling options for the demolition of the south side stands, it isrecommended that this task be undertaken ahead of close in order to accelerate the schedule. Thisincludes pre-qualification of implosion and demolition contractors, preparation of demolition

specifications, tender and demolition contract award and the necessary clean-up work. The keybenefits of this is a savings of approximately four (4) months in the revised project scheduleachieved by allowing the stadium General Contractor to commence work on the foundation ofthe new south side stands immediately following legal close. It also allows for additional costsavings as most of the concrete work can take place before the winter months and therefore avoida large portion of the winter construction cost. This would allow for substantial completion of thestadium by December 2013. However, this does require advancing a financial commitment of


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approximately $1.5M prior to close. These costs were included within the existing Councilapproved 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 tolegal close. The primary reason for this is the significant lead time required for tender, deliveryand fabrication of materials and specialized equipment necessary to complete the move. If thispre-ordering does not occur until after legal close in the spring of 2012, it will have an impact onthe parking garage and retail building construction schedule as a result of the coordinationrequired during the physical relocation of the building. The financial commitment required priorto close is estimated at approximately $1M. These costs were included within the existingCouncil 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 thestadium, arena and parking must be submitted with the applications. This must be done prior tothe close of the partnership in December 2011. These costs were included within the existingCouncil approved capital budget for the Lansdowne redevelopment.

Spending Plan

The following outlines the revised anticipated soft cost expenditures by the City and OSEGthroughout the Stage 2 Implementation Phase and Stage 3 Construction. The budgets are brokendown by original June 2010 budget, revised current budget and remaining project costs. Theoriginal 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 toapproximately $21M. OSEGs total projected expenditures for Stage 2 have increased toapproximately $10.9M. Although this change is significant, there are a number of reasons for theincrease in the projected expenditures during Stage 2 Implementation.

These are costs which fall under the overall project budget, and therefore do not reflect anincrease in total project budget. In the original June 2010 budget, these costs would have beenspent across Stage 2 and Stage 3; however the change in design development strategy, frompermit-ready to permitted, tendered and contracted, results in nearly all of the major detaileddesign development work by architects and engineers taking place prior to close. This is asignificant 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. Thisaccounts for the bulk of the increase in costs to close.

In addition to this, as the design work progresses, concurrent activity must occur and beintegrated into the design elements such as sustainability, accessibility compliance and work toensure cost control oversight of the designs. Additionally, these costs include expediting majortasks before close to reduce the overall project construction schedule including the demolition ofthe south side stands, pre-ordering materials and equipment for the Horticulture Building and the


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potential cost of relocating the contaminated soils. Ultimately, this results in expendituresoccurring earlier, but not an overall increase in the associated budget. The City retains ownershipof the design products for the stadium and parking, and therefore, the value of the majority ofthese 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 Lansdowneredevelopment:

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

The cost sharing of capital (and operating) costs for Lansdowne will vary depending on thenature 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 certaincomponents depending on the nature of the costs and which partner benefits or requires the coststo occur. The First and Second Cost Sharing Agreements which were approved by Council on 28June 2010, have expired due to the passage of time. It is therefore prudent and necessary that anew Cost Sharing Agreement be entered into by the parties to take them through to the closing ofthe Project Agreements.

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

Future Status Updates

As the implementation work proceeds, staff will provide Council with regular updates on theprogress and status of the elements identified in the revised project plan. Council, and in someinstances 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 tocommencing construction.


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

Retail Leasing Program

OSEG continues to work on the retail tenant program. Many local and national prospectivetenants have expressed interest in being at Lansdowne. OSEG remains in consultation with JohnWilliams from J.C. Williams Group to ensure that the retail program continues to meet therequirements and expectations 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 updateof 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 Ottawas interest in the Lansdowne transformation has beenchanged by a number of developments and updated assumptions to the variables in the projectfrom the pro forma presented in June 2010. The purpose of this update is to provide a summaryof the affected components of the Lansdowne transformation and their effect on the Citys totalpayments, and the extent to which this project is revenue neutral for the City. The affectedcomponents 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 atapproximately 360,000 square feet of leasable space, with a requirement to build 360 parkingstalls, fund infrastructure, common space and to contribute $2.5 million to the urban park budget.Changes are as follows:

The Citys share of property taxes that are expected to be generated from the Lansdownedevelopment in 2014 have increased from $3.48 million to $3.92 million. The increase isdue 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 Citys final funding equity included inthe closed system.

In June 2010 the retail development contained approximately 45,000 square feet ofintegrated 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. Thischange affects both the net cash flow into the waterfall and the calculation of the Citysfunding equity.


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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 costof $127.6 million (up from $98.9 million). The increase in development costs is primarilydue 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 hasbeen reduced from 7% to 6.5%, yielding an approximate annual payment of $7.8 millionper year (assuming a 30 year amortization).

OSEGs equity contributed to fund the retail (the difference between the totaldevelopment 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 ofthe 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 thefollowing table:


August 2011estimate

Annual cash from retailcontributed to the waterfall (aftermortgage payments, andvacancies 2014$)

$1.36 M $2.22 M

Annual taxes contributed to theCity (2014$)

$3.48 M $3.92 M

The Stadium and Arena

The total anticipated development cost for the stadium, arena and parking remains at $129.3million. No changes are anticipated to the operating pro forma from those presented in June2010, 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 beenimpacted. The inflationary cost pressure on the stadium, arena and parking was reviewedby the Citys project manager and it was concluded that this can be accommodated withinthe Citys capital budget of $129.3 million. The increased cost pressure on the retaildevelopment has been included in the higher development costs seen above. During theoperating period, both costs and revenues are subject to inflation, thus one is expected topartially offset the other such that the inflationary impact of opening in 2014 is notbelieved to present downside risk to the cash flows from the projects operations.

OSEGs interest rate: As previously described, OSEGs all-in interest rate has beendecreased from 7% to 6.5%.


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The Citys interest rate: The Citys effective borrowing rate (the current rate posted byInfrastructure 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 Citys cost of borrowing andfunding 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 Citys funding equity,OSEGs additional equity, and the total returns both parties expect to receive through theoperating period, as shown below:


August 2011estimate

Difference

Citys funding equity $13.5 M $2.5 M -$11.0 M

OSEGs minimum equity $30.0 M $30.0 M $0.0 M

OSEGs additional equity $2.3 M $15.8 M $13.5 M

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

Waterfall

L1 -

Additions

to Lifecycle

Waterfall

L2 -

Distribution

s to OSEG -

Waterfall

L2 -

Distribution

s to City -

return on

Waterfall

L3 -Return

of

Additional

Waterfall

L4 -Return

of Equity -

Waterfall

L4 -Return

of Equity -

Waterfall

L5 -

Distribution

s to City -

return on

Wat

L

Distri

s to O

Aug-11 $58.4 M $51.0 M $4.0 M $15.8 M $30.0 M $2.5 M $57.0 M $19.4 M $19.4 M

Jun-10 $58.4 M $69.7 M $29.9 M $2.3 M $30.0 M $13.5 M $41.5 M $.0 M $.0 M

$.0 M

$10.0 M

$20.0 M

$30.0 M

$40.0 M

$50.0 M

$60.0 M

$70.0 M

$80.0 M

ons

Total waterfall payments are expected to increase from approximately $245.2 million to $257.6million, a difference of $12.4 million. OSEGs expected payments are expected to increase by$14.4 million, reflecting returns on the increase in additional equity of $13.5 million. The Citys


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payments are expected to decrease by approximately $1.9 million reflecting lower returns giventhe reduction in the Citys 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 netrequirement from retail and office property taxes on the Lansdowne site, both on a nominal andon a present value basis.

Nominal NPV

Jun-10 Aug-11 Jun-10 Aug-11Avoided costs $114.0 M $114.0 M $48.0 M $48.0 MWaterfall payments(excluding paymentsto 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 MTotal 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 MProperty taxes $155.5 M $175.6 M $59.5 M $67.2 MRequired 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 Citys lower funding equityposition. Total debt servicing: the Citys total debt servicing costs are lower on a nominal and on a

present value basis due to the Citys 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 toachieve.


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

RURAL IMPLICATIONS

The Ottawa Farmers Market (OFM) will operate at an alternative location for the 2012 and 2013seasons. Work is progressing to fulfil Council direction with respect to Lansdowne becoming thepermanent home of the OFM. A draft of the recommended formal agreement between the Cityand 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 followingareas:

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 toensure internal coordination in the development of the programming proposal.

Phillips-Farevaag-Smallenberg (PFS) met between November 2010 and March 2011 withnumerous community stakeholders to obtain input into the development of the parkprogramming 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 Childrens Festival Community Gardening Network Coordinator for Just Food Ottawa Farmers Market Ottawa Art Gallery Glebe Business Improvement Area (BIA) Glebe Community Association


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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 GlebeCommunity Association on 23 March 2011, and the Old Ottawa South Community Associationon 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 influencedthe development of the proposed park programming proposal which will be brought forward toCouncil for consideration subsequent to the LDRPs consideration and input on the draftprogramming 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 ofinterpretive elements highlighting and reflecting the culture and history of the Algonquin FirstNations that will be integrated with, and form part of, the overall interpretive plan and public artstrategy for the site.

Advisory Committees

City staff met the Arts, Heritage and Culture Advisory Committee and the Parks and RecreationAdvisory Committee in the spring to provide them with information and obtain input on thepublic 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 andParks Canada that was in place prior to Council approval of the Lansdowne Partnership Planand Implementation report (Ref N: ACS2010-CMR-REP-0034) in June 2010 ceased. A newtripartite Committee was struck with a revised mandate focused on key areas including:transportation (including pedestrian and cycling considerations), south side stands, berm and


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emergency routes, tree protection and integrated site plan considerations. The Committee meetson 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 GlebeCommunity Association, Glebe BIA, Ward Councillor Doucet, and City staff to discuss the issueof the burial of the hydro wires and the establishment of the Bank Street ReconstructionAdvisory Committee (BRAC).

Following the 8 March 2011 Council motion directing the acceleration of the Bank Streetreconstruction, a BRAC meeting was held on 24 March 2011. The BRAC serves to disseminateinformation and provide input into the planning and ongoing implementation of the Bank Streetreconstruction. Sub-Committees of the BRAC were established to deal with matters such as theintersection 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 ChernushenkoCatherine Henry Councillors OfficeCatherine Waters Glebe Community Association (GCA)Guy Gigure GCAElizabeth Ballard GCAChristine Leadman Executive Director, Glebe BIAAllan Bateman Glebe BIA

Gilbert Russell Glebe BIAGreg Best Glebe BIAAlex DeVries Citizens for Safe CyclingJoe Mojsej Bank Street Reconstruction Project LeadJohn Smit Manager, Development Review (Urban)John Wright Corush Sunderland WrightDavid Hatton IBI GroupDavid Hook IBI GroupZiad Ghadban Manager, Design and ConstructionWayne Newell General Manager, Infrastructure ServicesZlatko Krstulich Transportation Planner

Neil Stout Program Manager, Municipal Design & ConstructionPatrick Dare Corporate Communications Strategist

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


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Ongoing Activity

The following information is available through Ottawa.ca:

The Guiding Principles for the Lansdowne Transformation, prepared by the LansdowneStrategic 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 informedabout the Citys work on the project and to notify them about upcoming events, news releasesand press conferences.

COMMENTS BY THE WARD COUNCILLOR(S)

The implications of this report are city-wide. The ward Councillor is a member of the LDRPhowever, 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 arebeing managed by the appropriate staff.

FINANCIAL IMPLICATIONS


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The total development cost of the stadium, arena and the parking infrastructure remains at $129.3million as approved by Council in 2010 which was projected to be funded from air rightsrevenue ($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 Parkreport, in the event that the net amount from the a

Documents

August Report Final August 11