The Office of the Auditor General (OAG) recently released her second sprint audit for Lansdowne 2.0. The risks are very concerning and, if realized, will lead to tens of millions more in costs.
- The OAG has, in no uncertain terms, identified public money going to Lansdowne 2.0—capital costs ($15.6 million), municipal accommodation tax ($38.1 million), and ongoing debt repayment costs in the city operating budget ($17.4 million per year for 40 years, for $694 million total) that “represents an opportunity cost as those funds could be used for other City services”—something repeatedly downplayed by the city, as not putting pressure on our operating budget or being able to spend elsewhere.
- The OAG has flagged a major risk on construction cost, that the contingency amount is not enough and could increase the cost of the project, leading to residents taking on more than the $331 million to which they are already committed. Tariffs, escalation costs and development complications all factor in. Even a modest 5% increase in contingency could add $18 million more to the project.
- The city has agreed to pay $16 million of the $32 million for "business interruption costs". This won't go to small businesses on site but rather will be paid by the city, for example for lost revenue from the north side stands being torn down. This cost could escalate.
- There is a financial risk associated with the contract with the developer to build the skyscrapers. After December 29, 2028, if the city fails to complete the transaction for any reason before the final closing deadline of July 31, 2031, the city would pay a penalty of $13 million to the developer, Mirabella.
- The city has recommended funds ($5 million) that should have gone to affordable housing to instead be allocated to building parking for the residential towers.
- The OAG has highlighted the significant risk of the long-term nature of the partnership to 2075, and tens of millions of potential downside variances in the waterfall distributions, particularly for the REDBLACKS, as a result: risk of $53 million decrease in waterfall distributions to the city on revenue projections, $30.9 million decrease on expense growth rates.
- The OAG also identifies a risk the REDBLACKS could leave after 2042, and highlights that the city is taking revenue projections into account with the Ottawa Charge staying at Lansdowne, something the city has fumbled and which is now unclear, to the detriment of fans of the team.