Auditors uncover risks and gaps in city’s oversight of Lansdowne Accord

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Independent auditors have found both “gaps” and “limits” in the way the city follows one of its most important public-private partnerships, the 30-year agreement with the Sports and Entertainment Group. of Ottawa (OSEG) at Lansdowne Park and TD Place.Under the 2014 agreement, OSEG manages the stadium and sports teams, parking lot and shopping areas at Lansdowne, and also covers any shortfalls, while the city retains ownership of the land, manages the park and invests $ 210 million. dollars in redevelopment.

This latest audit of the complex ‘cascading’ deal builds on themes from an earlier 2017 audit and its follow-up, which found that city staff lacked understanding and oversight of complex contracts.

This time, auditors pointed out that staff are only looking at the comparison of the Lansdowne partnership’s annual accounts compared to the previous year, which doesn’t give them much information on whether the deal is meeting expectations. .

“It’s like you’re not benchmarking, so you don’t have a clue of what to expect initially,” said deputy auditor Sonia Brennan.

Auditors said the city manager’s office couldn’t even produce a copy of the original assumptions and 2009 financial model that led to OSEG’s proposal being approved.

The stands on the north side of TD Place at Lansdowne Park and the arena below were built in the 1960s. (Kate Porter / CBC)

“Overestimated” OSEG contribution

Another discrepancy relates to the additional funds of over $ 100 million that OSEG owners have injected into Lansdowne, and on which they accumulate 8% interest each year.

The city has no direct role in approving these additional contributions from OSEG, the auditors noted. This matters because in the “cascading” order of financial priorities, OSEG owners are paid before the city receives a return on its investment.

Auditors also found that the amount of homeowners’ contribution was “overestimated” by $ 6.5 million after OSEG and the city settled a dispute over corrosion of steel in the Plaza’s roof. TD. This could result in an additional $ 14 million in interest accruing over the life of the transaction.

Auditors and finance staff disagreed on whether this was an accounting error, and Auditor General Ken Hughes stressed that there was no “bad faith From OSEG.

City leaders accepted all 11 recommendations, but city manager Steve Kanellakos said he felt staff had “strict oversight over what’s going on with the stunt.”

He also said staff still strongly recommend that city council extend the Lansdowne deal to 2054 and allow OSEG access to a contingency fund to help the group cope with the pandemic’s blow to its residents. retail and sports teams.

Originally, the audit was supposed to go immediately to full city council on Wednesday, the same day council was due to vote on this revised deal with OSEG. Mayor Jim Watson is now expected to delay the two until council meets on December 9.

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