Ottawa looking to settle $23M dispute over Lansdowne construction costs

The costof fixing rusted steel in the arenaof the former Ottawa Civic Centre now totals$23million, and city staff are proposing a deal to avoid further costs in case the dispute with Ottawa Sports and Entertainment Group goes to arbitration.

OSEG discovered corroded steel beams from a water leakwhen it was renovating the arena's roof for the Lansdownere-development.

In 2013, it said those repairs cost $17 million. But areport going to the city's finance and economic development committee Dec. 1now pegs OSEG'sclaim at $23.6 million. The new figure includes $1 millionfor extra asphalt, concrete paversandbigger bollards for the development'sshopping and restaurant district.

OSEG arguesthe city should bear those costs. But the city argues OSEGtook on the risks of construction atLansdowne.

City staff are now recommending a settlement that would see OSEG take out a loan, with the city acting as its guarantor.

"I think it's the best arrangement that protects taxpayers," said mayor Jim Watson.

He said the proposed deal won't cost taxpayers anything, even if it does delay the city's return on investment.

"I think given the history of the start of Lansdowne and all of the different court cases, the public just wants us to justget on with it, and operate Lansdowne, and make it a success andthe people place that it's become instead of getting dragged out in court and arbitrated settlements," said Watson.

Long-term revenuesrise, but so do costs

The first annual financial report on Lansdowne also goes to committee Dec. 1.

Longer retail leases,higher-than-anticipated payments from theCanadian Football League and additional income from naming rights mean net revenues for the 30-year contract could reach $424 million, $110 millionhigher than projected in 2012.

On the flip side, the steel repairsand extra retail construction increased OSEG's capital costs by$54 million.

According to the report, the end result for the cityis "an elimination" of the $22.6 millionin revenue that was expected to flow to the city when the Lansdowne agreement was signed in 2012.