1 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 Partnerships and Development Office/Directeur, Partenariats et Dveloppement en immobilier (613) 580-2424 x 21217, Gordon.MacNair@Ottawa.ca City Wide SUBJECT: OBJET : Ref N: ACS2010-CMR-REP-0027 LANSDOWNE PARTNERSHIP PLAN IMPLEMENTATION STATUS UPDATE MISE JOUR SUR LTAT DAVANCEMENT DE LA MISE EN UVRE 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 Lansdowne Stage 2 site plan approval be to review the final architectural plans for the air rights developments based on the conceptual plans and directions established by the Lansdowne Design Review Panel (LDRP) as described in this report and further that the UDRP provide the comments generated by their review to the General Manager of Planning and Growth Management; 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-sharing agreement with the Ottawa Sports and Entertainment Group (OSEG) on behalf of the City that is reflective of the spending plan as described in this report and within the approved budget envelopes for the Lansdowne redevelopment.

2 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 partenariat du 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 de lapprobation de la phase 2 du plan dimplantation de Lansdowne soit dexaminer les plans darchitecture finaux relatifs lamnagement des droits ariens axs sur les plans de conception et les orientations tablis par le Groupe consultatif et de rvision stratgique de la conception du parc Lansdowne, comme le dcrit le prsent rapport, et ensuite, que le Comit dexamen du design urbain fournisse les commentaires gnrs la suite de son examen au directeur gnral dUrbanisme et Gestion 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 une entente 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 dcrit dans le prsent rapport et qui respecte les enveloppes budgtaires approuves pour le 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 the revitalization of Lansdowne and directing staff to proceed with the implementation of the Lansdowne Partnership Plan (LPP) through the initiation of the required planning approval processes. The purpose of this report is to provide a status update on the work completed to date and recommendations related to adjustments to the project schedule and associated spending plan to facilitate the successful implementation of the Lansdowne redevelopment within the existing Council approved budget allocations. The status update report from Graham Bird and Associates (GBA) attached as Document 1 of this report, focuses on the following areas: Planning Site plan development, process and approvals; Project schedule and associated spending plan; Retail leasing program; and, Financial pro forma and assumptions.

3 Each of these areas is covered in detail in the GBA report. This Executive Summary highlights the key considerations contained in the GBA report and the rationale for the recommendations contained in this report. Planning Site Plan Development, Process and Approvals Site Plan Approval The integrated project team (the City and OSEG) has been working to meet the various site plan conditions required by Council in November 2010. The project team has focused on the development of numerous design documents which set out guidelines, principles and directions that will be integrated into the final site plan and implemented through the detailed design work required to prepare tender documents and building permit plans. The work undertaken to date has resulted in the development of a final site plan which the LDRP is conditionally approving with the exception of the conceptual architecture plan which is still evolving. As part of the final site plan, the LDRP has approved a Design Manual that includes the comprehensive guidelines, strategies and directions developed to respond to the conditions set out in the 19 November 2010 Site Plan Control Integrated Site Plan Lansdowne Partnership Plan (File No. D07-12-10-0220) report (Ref N: ACS2010-ICS-PGM-0209) report prior to finalizing the site plan. Lansdowne Design Review Panel (LDRP) and Urban Design Review Panel (UDRP) Process The LDRP is conditionally approving the final plans that Council mandated they be the final review authority for, and has approved the guidelines, strategies and directions contained in the Design Manual to guide implementation. The LDRP has retained its review role for finalizing and signing off on the details for the landscaping plan prior to tender documents being released. The LDRP has also retained final review and approval authority for the final architectural plans on a building-by-building basis. The role of the UDRP is proposed to provide review and comment to staff on the final architectural plans for the air rights developments based on concepts reviewed and signed off on by the LDRP. The continued role of the LDRP and the timelines for finalizing the LDRP reviews and approval of final plans has been confirmed with the LDRP within the modified project schedule. Project Schedule and Associated Spending Plan The completion date for the overall Lansdowne redevelopment has shifted from the end of 2013 to the fall of 2014. The renewed stadium will be substantially complete by December 2013. Despite this shift in completion dates the capital budgets allocated for design and construction have remained intact for the stadium and related parking elements.

4 Lansdowne Park Revitalization Schedule The project schedule as set out in Document 1 to this report outlines the key activities and milestones through the design development and subsequent construction phase of the project. The Stage 2 design development phase is scheduled to continue until late spring 2012 and Stage 3 construction to begin June 2012. Stage 2 concludes with the issuance of tender documents and receipt of the various permits required to initiate construction and the closing of the project agreements. By the winter of 2013 major construction begins for the mixed-use commercial and residential blocks, with building envelopes completed by the fall of 2013 and internal fit-up completed by the summer of 2014. This includes the office and residential portions to be undertaken by Request for Offers (RFO) Air Rights developers. Substantial completion of the north and south side stands will occur by December 2013. Following completion of the parking garage, the landscaping and major works for the urban park will take place in the spring of 2014 and are anticipated to be substantially complete by the fall of 2014 with full completion scheduled for the summer of 2015. The Stage 3 construction schedule enables the Canadian Football League (CFL) and North American Soccer League (NASL) team to be fully operational by the spring of 2014. The elements of the schedule that are being recommended for completion prior to close of the partnership include the following:

Completion of the stadium, arena and parking garage designs; Removal of contaminated soils; Demolition of the South Side Stands; Acquisition of the steel and related speciality equipment required for the relocation of the Horticulture Building; and, Completion of the Building Permit applications for the stadium, arena and parking garage.

Spending Plan The original Stage 2 budgeted costs for both the City and OSEG were $6.5M each until close in June 2011. The revised projected costs to be spent prior to close by the City have increased to approximately $21M. OSEGs total projected expenditures for Stage 2 have increased to approximately $10.9M. Although this change is significant, this report details the reasons for the increase in the projected expenditures during Stage 2 Implementation. These are costs which fall under the overall project budget and do not reflect an increase in total project budget. In the June 2010 budget, these costs were projected to have been spent across Stage 2 and Stage 3; however the change in design development strategy, from permit-ready to permitted, tendered and contracted, results in nearly all of the major detailed design development work by architects and engineers taking place prior to close. This is a significant amount of work. For example, working drawings must be brought up to 95% completion prior to close instead of 30% which

5 was what was assumed in the June 2010 project and spending plans. This accounts for the bulk of the increase in costs to close. In addition to this, as the design work progresses, concurrent activity must occur and be integrated into the design elements such as sustainability, accessibility compliance and work to ensure cost control oversight of the designs. Additionally, these costs include expediting major tasks before close to reduce the overall project construction schedule including the demolition of the south side stands, pre-ordering materials and equipment for the Horticulture Building and the potential cost of relocating the contaminated soils. Ultimately, this results in expenditures occurring earlier, but not an overall increase in the associated budget. The City retains ownership of the design products for the stadium and parking and therefore the value of the majority of these expenditures in the event that the project agreements do not close. Cost Sharing Agreement The cost sharing agreement redevelopment: will assign costs for the following components of the Lansdowne Stadium; Parking garage; Urban Park; Retail; Residential; and, Office.

The cost sharing of capital (and operating) costs for Lansdowne will vary depending on the nature of the expense. For example, some costs will be shared between all components (stadium, parking garage, urban park, retail, residential and office), while others will be specific to certain components depending on the nature of the costs and which partner benefits or requires the costs to occur. The First and Second Cost Sharing Agreements which were approved by Council on 28 June 2010, have expired due to the passage of time. It is therefore prudent and necessary that a new Cost Sharing Agreement be entered into by the parties to take them through to the closing of the Project Agreements. It is recommended that Council delegate the authority to the City Manager to negotiate and execute, on behalf of the City, a cost-sharing agreement reflective of the spending plan as described in this report and within the previously approved budget envelopes for the Lansdowne redevelopment. Future Status Updates As the implementation work proceeds, staff will provide Council with regular updates on the progress and status of the elements identified in the revised project plan. Council, and in some instances Planning Committee, will receive a series of reports in the fall of 2011 including: legal agreements; governance model;

6 formal agreement between the City and the Ottawa Farmers Market; the urban park programming proposal and costing; the Lighting Strategy; and, the detailed signage and wayfinding plans.

The partnership agreements will also be before Council in the spring of 2012 for closure prior to commencing construction. Additionally, staff will report back to Council as soon as possible should it become apparent that any of the outcomes identified through Council direction or key milestones in the project schedule cannot be met. Retail Leasing Program OSEG continues to work on the retail leasing program. Many local and national prospective tenants have expressed interest in being at Lansdowne. OSEG remains in consultation with J.C. Williams Group to ensure that the leasing efforts will meet the requirements described in the June 2010 retail strategy approved by Council. Financial Pro Forma and Assumptions PriceWaterhouseCoopers (PWC) was engaged to complete a comprehensive review and update of the assumptions contained in the June 2010 pro forma. The following is an excerpt from the August 2011 PWC report: The financial outlook for the City of Ottawas interest in the Lansdowne transformation has been changed by a number of developments and updated assumptions to the variables in the project from the pro forma presented in June 2010. The purpose of this update is to provide a summary of the affected components of the Lansdowne transformation and their effect on the Citys total payments, and the extent to which this project is revenue neutral for the City. The affected components are: The retail development; The stadium and arena; and Macro-economic factors. The Retail Development The retail development that is to accompany the stadium and area continues to be sized at approximately 360,000 square feet of leasable space, with a requirement to build 360 parking stalls, fund infrastructure, common space and to contribute $2.5 million to the urban park budget. Changes are as follows: The Citys share of property taxes that are expected to be generated from the Lansdowne development in 2014 have increased from $3.48 million to $3.92 million. The increase is due to the higher anticipated net operating income of the retail development. We note that prior to close, an independent tax assessment of the retail development will be conducted,

7 which will form the basis for the calculation of the Citys final funding equity included in the closed system. In June 2010 the retail development contained approximately 45,000 square feet of integrated office space. Due to market demand this has since been converted to retail, which is expected to yield higher rents and thus higher property taxes to the City. This change affects both the net cash flow into the waterfall and the calculation of the 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 base building costs and to tenant inducements. The mortgage required to fund the retail has been set at 65% of the value of the retail, or approximately $101.4 million. The anticipated all-in interest rate on the mortgage has been reduced from 7% to 6.5%, yielding an approximate annual payment of $7.8 million per year (assuming a 30 year amortization). OSEGs equity contributed to fund the retail (the difference between the total development cost and the size of the retail mortgage) has increased from approximately $12.6 million to $26.1 million. This is primarily due to the higher development costs of the retail.

Impact of changes: the increased cost of the retail development is offset by the increased value (as a result of the higher rents achieved), and lower costs of financing, as is shown in the following table: Item Annual cash from retail contributed to the waterfall (after mortgage payments, and vacancies 2014$) Annual taxes contributed to the City (2014$) The Stadium and Arena The total anticipated development cost for the stadium, arena and parking remains at $129.3 million. No changes are anticipated to the operating pro forma from those presented in June 2010, save the impact of commencing operations in 2014 (a year later). Macroeconomic Factors In addition to those changes described above, certain macroeconomic factors have changed: Inflation: by delaying the project by one year, both capital and operating costs have been impacted. The inflationary cost pressure on the stadium, arena and parking was reviewed by the Citys project manager and it was concluded that this can be accommodated within June 2010 estimate $1.36 M $3.48 M August 2011 estimate $2.22 M $3.92 M

8 the Citys capital budget of $129.3 million. The increased cost pressure on the retail development has been included in the higher development costs seen above. During the operating period, both costs and revenues are subject to inflation, thus one is expected to partially offset the other such that the inflationary impact of opening in 2014 is not believed to present downside risk to the cash flows from the 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 and funding equity will be lower than those presented in this report.

Impact on Equity and Waterfall Payments The changes to the assumptions that drive the pro forma affect the Citys funding equity, OSEGs additional equity, and the total returns both parties expect to receive through the operating period, as shown below: Item Citys funding equity OSEGs minimum equity OSEGs additional equity June 2010 estimate $13.5 M $30.0 M $2.3 M August 2011 estimate $2.5 M $30.0 M $15.8 M Difference -$11.0 M $0.0 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:

9
$8 .0M 0 $7 .0M 0 $6 .0M 0 $5 .0M 0 $4 .0M 0 $3 .0M 0 $2 .0M 0 $1 .0M 0 $.0M W aterfall L1 Additions toLifecy cle Fu nd

s n o l i M

Total waterfall payments are expected to increase from approximately $245.2 million to $257.6 million, a difference of $58.4M million. OSEGs expected$30.0M payments are expected to 9.4M $19.4M Aug-11 $12.4 $5 .0M 1 $ M 4.0 $1 .8M 5 $ M 2.5 $ .0M 57 $1 increase by Jun-10 $14.4 million, reflecting$58.4M on.7the increase in$2.3M returns $69 M $29.9M additional equity 3.5M$13.5 .5M $3 M 0.0 $1 of $ million..0M 41 $ The Citys $.0M payments are expected to decrease by approximately $1.9 million reflecting lower returns given the reduction in the Citys funding equity of $11.0 million. Waterfall summary City Share ($) OSEG Share ($) Total Summary August 2011 $143.3 M $101.9 M $245.2 M June 2010 $141.4 M $116.3 M $257.6 M Difference -$1.9 M $14.4 M $12.4 M

W aterfall W aterfall L2 L2 D istribution D istrib tion u sto City sto OS EG retu on rn returnon fun in d g equ ity eq uity

W aterfall L3 - Return of Ad ditional Eq to uity OS EG

W aterfall L4 - Return of Eq uity OS EG

W aterfall L4 - R eturn of Eq ity u C ity

W aterfall W aterfall W aterfall L5 L6 L6 D istribution D istrib ution D tribu is tion sto City sto OS - sto City EG retu on rn net cash n cash et d eem ed share sh are eq uity

The following table shows total returns to the City including the avoided costs of operating and maintaining the stadium and arena, waterfall payments, debt servicing costs, and the net requirement from retail and office property taxes on the Lansdowne site, both on a nominal and on a present value basis. Nominal Jun-10 Avoided costs Waterfall payments (excluding payments to the lifecycle reserve) $114.0 M $84.9 M Aug-11 $114.0 M $82.9 M Jun-10 $48.0 M $21.7 M NPV Aug-11 $48.0 M $21.5 M

10 Sub total Total debt servicing Sub total Property taxes Required from taxes $198.9 M -$218.8 M -$20.0 M $155.5 M 13% $196.9 M -$208.1 M -$11.2 M $175.6 M 6% $69.7 M -$91.9 M -$22.2 M $59.5 M 37% $69.5 M -$87.7 M -$18.2 M $67.2 M 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 equity position. 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 to achieve. In summary, based on the changes listed above, the net property taxes required in order to achieve revenue neutrality for the City is expected to be 6% on a nominal basis, and 27% on a present value basis. This represents an improvement to the Citys overall expected returns net of costs from those presented in June 2010. SOMMAIRE Le 28 juin 2010, le Conseil a approuv le rapport sur la mise en uvre du Plan de 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 travaux achevs ce jour, et davancer des recommandations quant au calendrier du projet et au plan des dpenses sy rapportant en vue de faciliter la mise en uvre russie de projet de ramnagement du 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 sommaire expose les grandes lignes des considrations cls prsentes dans le rapport de GBA, et la justification des recommandations formules dans le prsent rapport.

11 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 a uvr sur llaboration de plusieurs documents portant sur la conception qui tablissent des lignes directrices, des principes et des directives qui seront intgrs au plan dimplantation dfinitif, 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 de construction. Les travaux entrepris ce jour se sont solds par la production dun plan dimplantation dfinitif approuv de faon conditionnelle par le Groupe consultatif et de rvision stratgique de la conception du parc Lansdowne, lexception du plan darchitecture conceptuelle que lon peaufine 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 plan dimplantation dfinitif. Ce manuel comprend dans leur intgralit les lignes directrices, les stratgies et les directives labores afin de rpondre aux conditions nonces dans le rapport du 19 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 Lansdowne et 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 final de dcision, et a approuv les lignes directrices, les stratgies et les directives figurant dans le manuel de conception afin de faciliter le processus de mise en uvre. Le Groupe consultatif et de rvision stratgique de la conception du parc Lansdowne continuera dexercer son rle de rvision en ce qui a trait la finalisation et lapprobation des particularits du plan damnagement paysager avant lmission des documents dappel doffres. On a galement octroy au Groupe consultatif et de rvision stratgique de la conception du parc Lansdowne le pouvoir final de dcision et de rvision des plans architecturaux dfinitifs pour chaque 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 et approuvs par le Groupe consultatif et de rvision stratgique. Le rle continu du Groupe consultatif et de rvision stratgique de la conception du parc Lansdowne, et le calendrier rgissant les rvisions et lapprobation finale des plans dfinitifs par le Groupe consultatif lui ont t confirms dans le cadre de llaboration du calendrier du projet modifi.

12 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 budgets dimmobilisation 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 aperu des activits et des tapes importantes cls tout au long de llaboration de la conception et des phases subsquentes de construction du projet. La phase 2 dveloppement conceptuel est prvue se poursuivre jusqu la fin du printemps 2012, et la phase 3 travaux de construction doit dbuter en juin 2012. La phase 2 se soldera par 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 utilisation mixte sont prvus pour lhiver 2013. La construction des enveloppes des btiments doit tre acheve lautomne 2013, alors que les travaux damnagement intrieur seront mens terme avant lt 2014. Cela comprend les bureaux et les logements pour lesquels on procdera des demandes de propositions (DP) pour les droits ariens. Les gradins du ct nord seront en grande partie achevs avant dcembre 2013, et les gradins du ct sud avant dcembre 2013. Suite lachvement du garage de stationnement, lon procdera aux travaux damnagement paysager et aux travaux denvergure visant le parc urbain au printemps 2014. Ces travaux devraient tre en grande 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 de football (LCF) et lquipe de la North American Soccer League (NASL) dtre entirement fonctionnelles avant au printemps 2014. Parmi les lments du calendrier pour lesquels on recommande lachvement avant la conclusion du 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 la conclusion de la phase en juin 2011. Les cots estims rviss devant tre assums par la Ville

13 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 cette augmentation des cots soit considrable, les raisons pour la hausse des dpenses prvues pour la mise en uvre de la phase 2 du projet sont expliques en dtail dans le prsent rapport. Il sagit de cots compris dans le budget global du projet, mais qui ne se traduisent pas par une hausse du budget total pour le projet. Dans le budget de juin 2010, on prvoyait dpenser ces cots sur lensemble des phases 2 et 3. Par contre, les modifications effectues la stratgie de dveloppement conceptuel - les dmarches pour lobtention des permis, lobtention des permis, les appels doffres et loctroi des contrats pour les travaux reprsentent la quasi-totalit des travaux de dveloppement conceptuel dtaills entrepris par des architectes et des ingnieurs, et devant tre achevs avant la fermeture des comptes pour ces phases. Cela reprsente un travail considrable. Prenons lexemple des plans dexcution; ceux-ci doivent tre achevs 95 % avant la conclusion de la phase, au lieu de 30 %, comme prvu lorigine dans les plans du projet et des dpenses, en juin 2010. 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, la conformit laccessibilit et les travaux effectus afin dassurer le suivi budgtaire en matire de contrle des cots lis la conception. Ces cots comprennent galement le contrle du droulement des travaux denvergure avant la fermeture des comptes, afin dallger le calendrier global des travaux de construction du projet, y compris la dmolition des gradins du ct sud, la commande des matriaux et de lquipement pour ldifice de lHorticulture, ainsi que les cots ventuels pour le dplacement des sols contamins. En fin de compte, cela se traduit par une augmentation des dpenses lors des phases initiales du projet, mais ne reprsente pas une augmentation globale du budget associ. La Ville conserve la proprit des composantes conceptuelles pour le stade et le garage de stationnement, et par consquent la majorit des dpenses 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 du ramnagement 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 le parc 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 parc urbain, les composantes de commerce de dtail et rsidentielle, et les bureaux), alors que dautres cibleront des composantes en particulier, dpendamment de la nature des cots, et en fonction des besoins des partenaires de ce projet ou des avantages pour eux dassumer ces cots.

14 On recommande au Conseil de dlguer au directeur municipal le pouvoir de ngocier et de signer, au nom de la Ville, une entente de partage des cots qui reflte le plan des dpenses tel que dcrit dans le prsent rapport, et qui se situe lintrieur du cadre budgtaire approuv pour le 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 des mises jour priodiques au Conseil sur ltat davancement des composantes figurant dans le plan 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 en vue 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 savre quun ou plusieurs des enjeux cibls par les directives de Conseil ou quune tape importante cl ne 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 composante commerciale. Plusieurs locataires locaux et nationaux potentiels ont exprim leur intrt davoir un emplacement au parc Lansdowne. LOSEG demeure en consultation avec J.C. Williams Group afin dassurer que les efforts dploys pour la location satisferont aux exigences nonces dans 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 de PWC daot 2011 : Les perspectives financires de lintrt de la Ville dOttawa dans la transformation de Lansdowne ont volu en raison dun certain nombre de dveloppements et dhypothses rvises en ce qui a trait aux variables du projet. La prsente mise jour fournit un rsum des composants de la transformation de Lansdowne qui sont touchs, de leur effet sur les recettes totales de la Ville et du degr de neutralit des recettes du projet pour la Ville. Les composants touchs sont :

15 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 alentours conserve une superficie approximative de 360 000 pieds carrs despace locatif, avec lexigence damnager 360 places de stationnement, de financer linfrastructure et les espaces communs et de verser 2,5 millions de dollars au budget du parc urbain. Les changements importants sont les suivants :

Des impts fonciers que doit produire le dveloppement de Lansdowne en 2014 sont passs de 3,48 3,92 millions de dollars. Cette hausse est due au revenu dexploitation net prvu plus lev du dveloppement du commerce de dtail. Nous notons quavant la clture, une valuation indpendante du dveloppement du commerce de dtail sera effectue 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 du financement en capitaux propres de la Ville. Le cot total de dveloppement par pied carr despace brut (y compris le cot du stationnement, des infrastructures et de la contribution la pelouse avant) est pass de 290,76 319,95 millions de dollars. Il en rsulte un cot de dveloppement capitalis total de 127,6 millions de dollars (une hausse par rapport aux 98,9 millions de dollars prvus lorigine). La hausse des cots de dveloppement est due principalement aux hausses 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 taux dintrt total anticip sur lhypothque a diminu de 7 6,5 %, soit un paiement de quelque 8,2 millions de dollars par an (en supposant un amortissement de 30 ans). La contribution en capitaux propres de lOSEG au financement du commerce de dtail (lcart entre le cot total de dveloppement et le montant de lhypothque du commerce de dtail) est passe de quelque 12,6 26,1 millions de dollars. Cela est d surtout la hausse des cots de dveloppement du commerce de dtail.

Incidence des changements : le cot plus lev du dveloppement du commerce de dtail est compens par la valeur accrue (comme on la constat dans les loyers plus levs obtenus) et des cots de financement moindres, comme le montre le tableau ci-dessous : Poste Apport annuel en argent comptant du commerce de dtail au modle en valuation de juin 2010 $1.36 M valuation daot 2011 $2.22 M

16 cascade (aprs paiement de lhypothque, en $ de 2014) des impts annuels verss la Ville (en $ de 2014) 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 par rapport ceux prsents en juin 2010, sauf leffet du dbut dexploitation au dbut 2014 (un an plus 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 la Ville, qui slve 129,3 millions de dollars, peut accommoder la pression inflationniste sur le cot du stade, de larna et du stationnement. Durant la priode dexploitation, les cots et les recettes sont soumis linflation. On sattend donc ce que les cots compensent en partie les recettes de sorte que leffet inflationniste dune ouverture en 2014 nest pas cens prsenter de risque ngatif important pour le projet. Taux dintrt de lOSEG : Comme on la dcrit prcdemment, le taux dintrt total de lOSEG a diminu de 7 6,5 %. Taux dintrt de la Ville : le taux crditeur effectif de la Ville (le taux actuel affich par Infrastructure Ontario sur une dbenture entirement amortie en 40 ans) est actuellement de 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 en capitaux propres de la Ville sera infrieur ceux prsents dans ce rapport.

$3.48 M

$3.92 M

Impact sur les paiements d'quit et de cascade Les changements aux hypothses qui entrent dans le calcul des pro forma influent sur le financement en capitaux propres de la Ville, les capitaux propres additionnels de lOSEG et les recettes totales que les deux parties comptent recevoir au cours de la priode dexploitation, comme suit : Poste Financement en capitaux propres de la Ville Capitaux propres minimums de lOSEG Capitaux propres additionnels de lOSEG valuation de juin 2010 $13.5 M $30.0 M $2.3 M valuation daot 2011 $2.5 M $30.0 M $15.8 M cart -$11.0 M $0.0 M $13.5 M

17 Leffet de laugmentation des capitaux propres supplmentaires de lOSEG et de la diminution du financement en capitaux propres de la Ville, ainsi que des loyers plus levs du dveloppement du commerce de dtail a modifi les recettes attendues par chaque partie, comme suit :

$8 .0M 0 $7 .0M 0 $6 .0M 0 $5 .0M 0 $4 .0M 0 $3 .0M 0 $2 .0M 0 $1 .0M 0 $.0M W aterfall L1 Additions toLifecy cle Fu nd

s n o l i M

On sattend ce que le total des $51.0M versements M le modle0.0M cascade passe.0de quelque 245,2 M Aug-11 $58 M .4 $ 4.0 dans $1 .8M 5 $3 en $ M 2.5 $ 57 M $1 M 9.4 $ 19.4 Jun-10 257,6 millions de dollars,.4soit un .7cart $29.9M de 12,4 $2.3M millions$30.0Mdollars.MOn $41.5M de sattend .0M que les $58 M $6 M 9 $1 .5 3 $ ce $.0M recettes prvues de lOSEG augmentent de 14,4 millions de dollars et que celles de la Ville diminuent de 1,9 million de dollars environ. Prire de noter que les retours plus levs de lOSEG sont dus en partie au fait que lon sattend ce quil verse des capitaux propres supplmentaires de 13,3 millions de dollars de plus quen juin 2010, dont le retour est reflt dans les recettes totales. Rsum du modle en cascade Quote-part de la Ville ($) Quote-part de lOSEG ($) Total Aot 2011 $143.3 M $101.9 M $245.2 M Juin 2010 $141.4 M $116.3 M $257.6 M cart -$1.9 M $14.4 M $12.4 M

W aterfall W aterfall L2 L2 D istribution D istrib tion u sto City sto OS EG retu on rn returnon fun in d g equ ity eq uity

W aterfall L3 - Return of Ad ditional Eq to uity OS EG

W aterfall L4 - Return of Eq uity OS EG

W aterfall L4 - R eturn of Eq ity u C ity

W aterfall W aterfall W aterfall L5 L6 L6 D istribution D istrib ution D tribu is tion sto City sto OS - sto City EG retu on rn net cash n cash et d eem ed share sh are eq uity

18 Rsum Le tableau suivant montre le total des retours pour la Ville, y compris les cots dexploitation et dentretien vits pour le stade et larna, les versements au modle en cascade, le service de la dette 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 Juin 2010 Cots vits Versements au modle en cascade (sauf paiements la rserve du cycle de vie) Total partiel Total du service de la dette Total partiel Impts fonciers Requis des impts $114.0 M $84.9 M $198.9 M -$218.8 M -$20.0 M $155.5 M 13% Aot 2011 $114.0 M $82.9 M $196.9 M -$208.1 M -$11.2 M $175.6 M 6%

Valeur actualise Juin 2010 $48.0 M $21.7 M $69.7 M -$91.9 M -$22.2 M $59.5 M 37% Aot 2011 $48.0 M $21.5 M $69.5 M -$87.7 M -$18.2 M $67.2 M 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 pour raliser la neutralit des recettes de la Ville sont passs de 13 6 % sur une base de valeur nominale, 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 the revitalization of Lansdowne and directing staff to proceed with the implementation of the Lansdowne Partnership Plan (LPP) through the initiation of the required planning approval processes. Council direction included having the three major components of the redevelopment

19 brought together into a single Integrated Site Plan through the Citys two stage site plan approval process. At the June 2010 meeting, Council also approved the Lansdowne Results of the RFP Process Exhibition Hall Facility report (Ref N: ACS2010-CMR-REP-0033) authorizing the City Manager to negotiate and execute an agreement with the Shenkman Corporation for the design, construction, operation and financing of a trade show and exhibition hall facility. These agreements have been completed and the required zoning adopted by Council on 6 October 2010, as per Motion 97/16 approved by Council on 22 September 2010. Shenkman Corporation also obtained the required funding for the project. The construction of the trade show and exhibition hall facility is currently underway and is tracking on time and on budget. The facility is scheduled to be operational this fall. As a result, it is the opinion of Legal Services that the requirements set out in Motion No. 92/22 that passed at the June 2010 meeting have been fulfilled, thus satisfying the condition precedent under the Motion for the closing of the Project Agreements for the Lansdowne Partnership Plan. Consequently, by way of this report, and in reliance upon a separate opinion from Legal Services, the City Manager certifies to Council that the requirements imposed on each of the City and Shenkman Corporation under Motion No. 92/22 have been fulfilled. On 7 September 2010, the Corporate Services and Economic Development Committee (CSEDC) approved the Request for Offers Air Rights of Residential and Office Components of the Lansdowne Partnership Plan Implementation report (Ref N: ACS2010-CMR-REP-0045). This report initiated a two-stage process to facilitate the lease or sale of the air rights over the proposed mixed-use and retail development. The two-stage process includes a Request for Expression of Interest (REOI) followed by a Request for Offers (RFO). The Terms of Reference contained in the air rights report were amended by the Corporate Services and Economic Development Committee (CSEDC) to indicate that the preferred option for the City would be to lease the air rights at Lansdowne Park and that the sale of air rights be considered a secondary option. A report on the findings of the Stage One REOI and the RFO process for the lease or sale of the air rights at Lansdowne Park is being considered by the Finance and Economic Development Committee (FEDCO) at its meeting of 18 August 2011. On 26 September 2010, Council approved the Zoning Lansdowne Park (Lansdowne Partnership Plan) report (Ref N: ACS2010-ICS-PGM-0154) and on 6 October 2010, through Motion 98/13, enacted Zoning By-law 2010-329 to repeal By-law No. 2010-314 and to amend By-law No. 2008-250 to change the zoning of lands as per the Planning and Environment Committee (PEC) Agenda 80, Item 5, Report Reference Number ACS2010-ICS-PGM-0154. On 19 November 2010, Council approved the Site Plan Control Integrated Site Plan Lansdowne Partnership Plan (File No. D07-12-10-0220) report (Ref N: ACS2010-ICS-PGM0209) subject to the standard and special conditions set out in Document 6 of that report. On 8 December 2010, Council, as Committee of the Whole, approved Motion 8/9 which authorized an additional $17 million in capital authority for the acceleration of the reconstruction of Bank Street between Holmwood Avenue and the Queensway. The reconstruction of Bank Street is on schedule and on budget. A summary of the activity of the Bank Street Reconstruction

20 Advisory Committee and engagement with the community is provided under the Consultation section of this report. The Minutes of Settlement resulting from the Ontario Municipal Board (OMB) mediation sessions held in March 2011 were subsequently endorsed by Planning Committee on 12 April 2011 and Council on 13 April 2011, and included the following modifications:

Elimination of mid-rise residential buildings along Holmwood Avenue; Reduction in the height of the residential tower at Bank and Holmwood; A cap of 280 total residential units; Restrictions on vehicular access to Lansdowne from Holmwood Avenue; and Collaboration between the City and community groups on traffic and parking issues.

This past May, the OMB heard the remaining appeals, filed by three individuals. The Board reviewed the evidence tendered and rendered its decision on 15 June 2011. The final decision of the OMB dismissed the appeals and gave approval to the modified zoning by-law. The OMB decision fulfils one of the conditions precedent to finalizing the site plan approval as directed by Council on 19 November 2010. City staff has been working with the Ottawa Sports and Entertainment Group (OSEG) to implement the recommendations and motions approved by Council associated with the June, September and November 2010 reports. DISCUSSION The purpose of this report is to provide a status update on work completed to date and recommendations related to adjustments to the project schedule and associated spending plan to facilitate the successful continuation of the implementation of the Lansdowne redevelopment within the existing Council approved budget allocations. The status update contained in the report from Graham Bird and Associates (GBA) attached as Document 1 of this report focuses on the following areas: Planning Site plan development, process and approvals; Project schedule and associated spending plan; Retail leasing program; and, Financial pro forma and assumptions.

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

21 This effort has brought the various design and consultant teams together into a single cohesive design team to focus the significant effort that has gone into moving forward with the work required to finalize the site plan approval. This effort will continue through the final detailed design work that will occur during the implementation phase. This will ensure that the design details to be implemented are based on the final approved plans. The guidelines, directions, and strategies will continue to be coordinated and will accommodate the various needs and requirements of the different disciplines to achieve full integration amongst all components of the project within a framework that achieves the highest design standards possible. The work undertaken to date has resulted in the development of a final site plan which the LDRP is conditionally approving with the exception of the conceptual architecture plan which is still evolving. As part of the final site plan, the LDRP has approved the comprehensive guidelines, strategies and directions Design Manual that was developed to respond to the conditions set out in the November Site Plan report as conditions to be satisfied prior to finalizing the site plan. Lansdowne Design Review Panel (LDRP) and Urban Design Review Panel (UDRP) Process As noted, the LDRP is conditionally approving the final plans that Council mandated they be the final review authority for, and has approved the guidelines, strategies and directions contained in the Design Manual to guide implementation. The LDRP has retained its review role for finalizing and signing off on the details for the landscaping plan prior to tender documents being released. The LDRP has also retained final review and approval authority for the final architectural plans on a building-by-building basis. The role of the UDRP is proposed to provide review and comment to staff on the final architectural plans for the air rights developments based on concepts reviewed and signed off on by the LDRP. The continued role of the LDRP and timelines for finalizing the LDRP reviews and approval of final plans has been confirmed with the LDRP within the modified project schedule for project implementation. Ottawa Farmers Market Since its inception as a two-year pilot program in 2006, the Ottawa Farmers Market (OFM) has successfully proven itself to be a valued part of the Ottawa region so much so the City renewed the program in 2008 and again for another two years in 2010. The OFM is in its sixth successful year of operation at Lansdowne Park and is an integral part of the Lansdowne revitalization. The City worked with the J.C. Williams Group and the Ottawa Farmers Market Board to develop a Memorandum of Understanding (MOU) to address the Markets vision, product mix, rules and regulations, architectural design and financial arrangement with the City the goal of which was to ensure a vibrant farmers market at Lansdowne Park. The MOU was received by City Council in November of 2010 and is the frame of reference and basis for the OFM and staff negotiations moving forward.

22 Staff are currently working with the OFM Board on the relocation plan for the 2012/13 seasons and the final designs and infrastructure requirements for Aberdeen Square, the Markets permanent location at Lansdowne Park. A number of possible locations have been considered for 2012/13 and Brewer Park is seen as the most desirable by the OFM Board. Staff will investigate accommodating this request. The final location will be identified by early fall. The OFM Board has been consulted by Phillips-Farevaag-Smallenberg (PFS), the firm that is overseeing the Programming Strategy for Lansdowne Park, on the design of and infrastructure requirements for Aberdeen Square. Market stall format and layout have been designed to meet the farmers requirements. Trees in a grid pattern were requested by the farmers to provide shade and a green, attractive environment reminiscent of European market squares. The grid design will also provide convenient locations for electrical and water supply for the stalls. Once the final design and associated operational and financial details have been worked out with the OFM, they will be included in a formal agreement that will be presented to Council for consideration. This agreement will replace the MOU and establish the conditions to ensure the long-term success of the Ottawa Farmers Market at Lansdowne Park. Project Schedule and Associated Spending Plan The completion date for the Lansdowne redevelopment has shifted from the end of 2013 to the fall of 2014. The renewed stadium will be substantially complete by December 2013. Despite this shift in completion dates the capital budgets allocated for design and construction have remained intact for the stadium and related parking elements. The key reason for the shift in schedule is the delay in the construction start date until the spring of 2012. The shift in the construction start date is attributable to delays resulting from the Friends of Lansdowne (FOL) legal challenge, the extended timeframe required to complete of the OMB Appeal and the recommendation to shift from being permit ready prior to construction to being permitted, tendered and contracted. The shift from permit ready to permitted, tendered and contracted is significant as the designs are near-complete design packages (95% design development) which are ready to be constructed whereas permit ready are much less defined (usually 30% design development) and continue to be developed throughout the construction period. The shift in approach will result in the designs being confirmed, costed in detail and contracted prior to construction. In the summer of 2010, the Friends of Lansdowne (FOL) filed a legal challenge against the City of Ottawa regarding its ability to enter into a partnership with the Ottawa Sports and Entertainment Group (OSEG). As the litigation process evolved it became clear that the court hearing would not occur until the late spring or early summer of 2011, with a right of appeal which could prolong the litigation process until the winter of 2012. As such it became apparent to both partners that it made sense to alter the design development strategy. This shift in approach enables the project to proceed in a positive manner through the completion of the design, tender and final contracts for each of the components (the stadium, arena, parking garage, retail, residential, office and urban park) of the Lansdowne redevelopment anticipated to

23 conclude by late winter of 2012 coincident with the potential litigation process should an appeal by filed by the FOL. Further this approach enables the project teams to focus on development, environmental, heritage, integrated site plan and design approvals in the event that an appeal by the FOL were to proceed. Under this approach the timeline to complete the partnership agreements and the waiving of conditions is extended, however, the result is a reduction in risk and the completion of the stadium, parking and site designs. The City retains the rights to the stadium and parking designs, being managed by OSEG on its behalf, should the partnership not proceed. Moreover, this enables the leasing efforts to proceed in accordance with the retail strategy approved by Council strengthening the successful revitalization of Lansdowne. Lansdowne Park Revitalization Schedule The included project schedule as set out in Document 1 to this report outlines the key activities and milestones through the design development and subsequent construction phase of the project. The Stage 2 design development phase is scheduled to continue until late spring 2012 and Stage 3 construction to begin June 2012. The core design development of the stadium, parking garage, retail, site servicing infrastructure, Horticulture Building and urban park will be complete by late 2011 so that the process of permitting, tendering and contracting can be initiated through the winter of 2012. Additional activities taking place throughout Stage 2 include finalizing subsequent conditions on the site plan such as refinement and implementation of a detailed lighting plan, advancing the Transportation Demand Management (TDM) and operations plans to their final form, developing the detailed signage and wayfinding plans which will be brought forward to Planning Committee in November 2011 as a requirement to waiving of the signage by-law, finalizing engineering approvals and refining the building architecture. Additional activities which relate to both design development and meeting the subsequent conditions of site plan such as on-going monitoring of the implementation of the Council approved Retail Strategy, accessibility and sustainability compliance review of detailed designs and cost control analysis will also be completed. Stage 2 concludes with the issuance of tender documents and receipt of the various permits required to initiate construction and the closing of the project agreements. The Stage 3 construction schedule remains similar to the schedule approved in June 2010 in terms of the duration of the construction period. Stadium construction and major garage excavation commences in June 2012, this includes the necessary preparation for the relocation of the Horticulture Building. Construction of civil servicing considerations occurs concurrently throughout the site, including the rough grading of the urban park area. By the winter of 2013 major construction begins for the mixed-use commercial and residential blocks, with building envelopes completed by the fall of 2013 and internal fit-up completed by the summer of 2014. This includes the office and residential portions to be undertaken by Request for Offers (RFO) Air Rights developers. Following completion of the parking garage,

24 the landscaping and major works for the urban park will take place in the spring of 2014 and are anticipated to be substantially complete by the fall of 2014 with full completion scheduled for the summer of 2015. Substantial completion of the north and south side stands will occur by December 2013. The current project schedule enables the Canadian Football League (CFL) and North American Soccer League (NASL) team to be fully operational by the spring of 2014.

Scheduling Considerations Removal of Contaminated Soils Lansdowne currently contains areas of contaminated soil which will be handled appropriately through the redevelopment in accordance with the Ministry of Environment (MOE) policies and regulations. Within the proposed mixed-use area on the northern portion of the site, there is an existing section of contaminated soil which will ultimately be excavated through the construction of the parking garage and as much contaminated soil as possible is to be relocated to create the berm along the newly constructed south side stands. In order to ensure that the project falls under the existing MOE legislation related to Record of Site Condition, the relocation of these soils must take place as early as possible following legal close in the spring of 2012. If legal close is delayed beyond 30 June 2012, it is recommended that the City undertake the work to relocate the contaminated soil to the berm ahead of close to ensure that the timelines set out by the MOE are respected. This will ensure that the project implementation scheduled is maintained. It is therefore recommended that the City proceed with this by the spring of 2012 whether legal close has been achieved or not. The work to complete the necessary soil remediation, including consultant fees, is projected to be $400,000. These costs were included within the existing Council approved capital budget for the Lansdowne redevelopment. South Side Stands Demolition Upon examining the scheduling options for the demolition of the south side stands, it is recommended that this task be undertaken ahead of close in order to accelerate the schedule. This includes pre-qualification of implosion and demolition contractors, preparation of demolition specifications, tender and demolition contract award and the necessary clean-up work. The key benefits of this is a savings of approximately four (4) months in the revised project schedule achieved by allowing the stadium General Contractor to commence work on the foundation of the new south side stands immediately following legal close. It also allows for additional cost savings as most of the concrete work can take place before the winter months and therefore avoid a large portion of the winter construction cost. This would allow for substantial completion of the stadium by December 2013. However, this does require advancing a financial commitment of

25 approximately $1.5M prior to close. These costs were included within the existing Council approved capital budget for the Lansdowne redevelopment. Horticulture Building To facilitate the work related to the relocation of the Horticulture Building, it is recommended that the pre-ordering of steel and equipment required for the relocation be undertaken prior to legal close. The primary reason for this is the significant lead time required for tender, delivery and fabrication of materials and specialized equipment necessary to complete the move. If this pre-ordering does not occur until after legal close in the spring of 2012, it will have an impact on the parking garage and retail building construction schedule as a result of the coordination required during the physical relocation of the building. The financial commitment required prior to close is estimated at approximately $1M. These costs were included within the existing Council approved capital budget for the Lansdowne redevelopment. Building Permits As per the requirement of the City of Ottawa, the Building Permit Fee of $910,000 for the stadium, arena and parking must be submitted with the applications. This must be done prior to the close of the partnership in December 2011. These costs were included within the existing Council approved capital budget for the Lansdowne redevelopment. Spending Plan The following outlines the revised anticipated soft cost expenditures by the City and OSEG throughout the Stage 2 Implementation Phase and Stage 3 Construction. The budgets are broken down by original June 2010 budget, revised current budget and remaining project costs. The original Stage 2 costs budgeted for both the City and OSEG were $6.5M each until close in June 2011. The revised projected costs to be spent prior to close by the City have increased to approximately $21M. OSEGs total projected expenditures for Stage 2 have increased to approximately $10.9M. Although this change is significant, there are a number of reasons for the increase in the projected expenditures during Stage 2 Implementation. These are costs which fall under the overall project budget, and therefore do not reflect an increase in total project budget. In the original June 2010 budget, these costs would have been spent across Stage 2 and Stage 3; however the change in design development strategy, from permit-ready to permitted, tendered and contracted, results in nearly all of the major detailed design development work by architects and engineers taking place prior to close. This is a significant amount of work. For example, working drawings must be brought up to 95% completion prior to close instead of the 30% reflected in the June 2010 project schedule. This accounts for the bulk of the increase in costs to close. In addition to this, as the design work progresses, concurrent activity must occur and be integrated into the design elements such as sustainability, accessibility compliance and work to ensure cost control oversight of the designs. Additionally, these costs include expediting major tasks before close to reduce the overall project construction schedule including the demolition of the south side stands, pre-ordering materials and equipment for the Horticulture Building and the

26 potential cost of relocating the contaminated soils. Ultimately, this results in expenditures occurring earlier, but not an overall increase in the associated budget. The City retains ownership of the design products for the stadium and parking, and therefore, the value of the majority of these expenditures in the event that the project agreements do not close. Cost Sharing Agreement The cost sharing agreement redevelopment: will assign costs for the following components of the Lansdowne Stadium; Parking garage; Urban park; Retail; Residential; and, Office.

The cost sharing of capital (and operating) costs for Lansdowne will vary depending on the nature of the expense. For example, some costs will be shared between all components (stadium, parking garage, urban park, retail, residential and office), while others will be specific to certain components depending on the nature of the costs and which partner benefits or requires the costs to occur. The First and Second Cost Sharing Agreements which were approved by Council on 28 June 2010, have expired due to the passage of time. It is therefore prudent and necessary that a new Cost Sharing Agreement be entered into by the parties to take them through to the closing of the Project Agreements. It is recommended that Council delegate the authority to the City Manager to negotiate and execute, on behalf of the City, a cost-sharing agreement reflective of the spending plan as described in this report and within the previously approved budget envelopes for the Lansdowne redevelopment. Future Status Updates As the implementation work proceeds, staff will provide Council with regular updates on the progress and status of the elements identified in the revised project plan. Council, and in some instances Planning Committee, will receive a series of reports in the fall of 2011 including: legal agreements; governance model; formal agreement between the City and the Ottawa Farmers Market; the urban park programming proposal and costing; the Lighting Strategy; and, the detailed signage and wayfinding plans.

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

27 Additionally, staff will report back to Council as soon as possible should it become apparent that any of the outcomes identified through Council direction or key milestones in the project schedule cannot be met. Retail Leasing Program OSEG continues to work on the retail tenant program. Many local and national prospective tenants have expressed interest in being at Lansdowne. OSEG remains in consultation with John Williams from J.C. Williams Group to ensure that the retail program continues to meet the requirements and expectations described in the June 2010 retail strategy approved by Council.

Financial Pro Forma and Assumptions PriceWaterhouseCoopers (PWC) was engaged to complete a comprehensive review and update of the assumptions contained in the June 2010 pro forma. The following is an excerpt from the August 2011 PWC report: The financial outlook for the City of Ottawas interest in the Lansdowne transformation has been changed by a number of developments and updated assumptions to the variables in the project from the pro forma presented in June 2010. The purpose of this update is to provide a summary of the affected components of the Lansdowne transformation and their effect on the Citys total payments, and the extent to which this project is revenue neutral for the City. The affected components are: The retail development; The stadium and arena; and Macro-economic factors. The Retail Development The retail development that is to accompany the stadium and area continues to be sized at approximately 360,000 square feet of leasable space, with a requirement to build 360 parking stalls, fund infrastructure, common space and to contribute $2.5 million to the urban park budget. Changes are as follows: The Citys share of property taxes that are expected to be generated from the Lansdowne development in 2014 have increased from $3.48 million to $3.92 million. The increase is due to the higher anticipated net operating income of the retail development. We note that prior to close, an independent tax assessment of the retail development will be conducted, which will form the basis for the calculation of the Citys final funding equity included in the closed system. In June 2010 the retail development contained approximately 45,000 square feet of integrated office space. Due to market demand this has since been converted to retail, which is expected to yield higher rents and thus higher property taxes to the City. This change affects both the net cash flow into the waterfall and the calculation of the Citys funding equity.

28 The total development cost per square foot of gross space of the retail development (including the cost of the parking, infrastructure and the contribution to the front lawn) has increased from $290.76 to $319.95. This yields a total capitalized development cost of $127.6 million (up from $98.9 million). The increase in development costs is primarily due to increases in base building costs and to tenant inducements. The mortgage required to fund the retail has been set at 65% of the value of the retail, or approximately $101.4 million. The anticipated all-in interest rate on the mortgage has been reduced from 7% to 6.5%, yielding an approximate annual payment of $7.8 million per year (assuming a 30 year amortization). OSEGs equity contributed to fund the retail (the difference between the total development cost and the size of the retail mortgage) has increased from approximately $12.6 million to $26.1 million. This is primarily due to the higher development costs of the retail. Impact of changes: the increased cost of the retail development is offset by the increased value (as a result of the higher rents achieved), and lower costs of financing, as is shown in the following table: Item Annual cash from retail contributed to the waterfall (after mortgage payments, and vacancies 2014$) Annual taxes contributed to the City (2014$) The Stadium and Arena The total anticipated development cost for the stadium, arena and parking remains at $129.3 million. No changes are anticipated to the operating pro forma from those presented in June 2010, save the impact of commencing operations in 2014 (a year later). Macroeconomic Factors In addition to those changes described above, certain macroeconomic factors have changed: Inflation: by delaying the project by one year, both capital and operating costs have been impacted. The inflationary cost pressure on the stadium, arena and parking was reviewed by the Citys project manager and it was concluded that this can be accommodated within the Citys capital budget of $129.3 million. The increased cost pressure on the retail development has been included in the higher development costs seen above. During the operating period, both costs and revenues are subject to inflation, thus one is expected to partially offset the other such that the inflationary impact of opening in 2014 is not believed to present downside risk to the cash flows from the projects operations. OSEGs interest rate: As previously described, OSEGs all-in interest rate has been decreased from 7% to 6.5%. June 2010 estimate $1.36 M $3.48 M August 2011 estimate $2.22 M $3.92 M

29 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 and funding equity will be lower than those presented in this report.

Impact on Equity and Waterfall Payments The changes to the assumptions that drive the pro forma affect the Citys funding equity, OSEGs additional equity, and the total returns both parties expect to receive through the operating period, as shown below:

Item Citys funding equity OSEGs minimum equity OSEGs additional equity

June 2010 estimate $13.5 M $30.0 M $2.3 M

August 2011 estimate $2.5 M $30.0 M $15.8 M

Difference -$11.0 M $0.0 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:
$80.0 M $70.0 M $60.0 M $50.0 M $40.0 M $30.0 M $20.0 M $10.0 M $.0 M

s n o l i M

Total waterfall payments are M $51.0M to $4.0 M $15.8M approximately $245.2 million to $257.6 increase from $30.0M $2.5M $57.0M $19.4 M $19.4 M Aug-11 $58.4 expected million, a differenceJun-10 $12.4Mmillion. OSEGs expected paymentsMare $41.5M of $58.4 expected to increase by $69.7 M $29.9 M $2.3 M $30.0 M $13.5 $.0 M $.0 M $14.4 million, reflecting returns on the increase in additional equity of $13.5 million. The Citys

Waterfall Waterfall Waterfall Waterfall Waterfall Waterfall Waterfall L2 L5 Waterfall L2 L3 - Return Waterfall L6 L6 Distribution Distribution L1 Distribution of Distribution Distribution L4 - Return L4 - Return Additions s to City s to City s to OSEGAdditional of Equity - of Equity s to OSEG - s to City return on return on to Lifecycle return on Equity to net cash net cash OSEG City Fund funding deemed equity OSEG share share equity equity

30 payments are expected to decrease by approximately $1.9 million reflecting lower returns given the reduction in the Citys funding equity of $11.0 million. Waterfall summary City Share ($) OSEG Share ($) Total August 2011 $143.3 M $101.9 M $245.2 M June 2010 $141.4 M $116.3 M $257.6 M Difference -$1.9 M $14.4 M $12.4 M

Summary The following table shows total returns to the City including the avoided costs of operating and maintaining the stadium and arena, waterfall payments, debt servicing costs, and the net requirement from retail and office property taxes on the Lansdowne site, both on a nominal and on a present value basis. Nominal Jun-10 Avoided costs Waterfall payments (excluding payments to the lifecycle reserve) Sub total Total debt servicing Sub total Property taxes Required from taxes $114.0 M $84.9 M $198.9 M -$218.8 M -$20.0 M $155.5 M 13% Aug-11 $114.0 M $82.9 M $196.9 M -$208.1 M -$11.2 M $175.6 M 6% Jun-10 $48.0 M $21.7 M $69.7 M -$91.9 M -$22.2 M $59.5 M 37% NPV Aug-11 $48.0 M $21.5 M $69.5 M -$87.7 M -$18.2 M $67.2 M 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 equity position. 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 to achieve.

31 In summary, based on the changes listed above, the net property taxes required in order to achieve revenue neutrality for the City is expected to be 6% on a nominal basis, and 27% on a present value basis. This represents an improvement to the Citys overall expected returns net of costs from those presented in June 2010. RURAL IMPLICATIONS The Ottawa Farmers Market (OFM) will operate at an alternative location for the 2012 and 2013 seasons. Work is progressing to fulfil Council direction with respect to Lansdowne becoming the permanent home of the OFM. A draft of the recommended formal agreement between the City and the OFM will be brought forward to Council for consideration and approval later this year. CONSULTATION In June 2010, Council directed staff to implement mechanisms for engagement in the following areas: the development of the programming proposal for the urban park; continued engagement with the National Capital Commission (NCC) and Parks Canada; the Bank Street Reconstruction Advisory Committee (consisting of the Ward Councillor, the Glebe Community Association and the Glebe Business Improvement Area (BIA). Development of the Urban Park Programming Proposal A Technical Committee was established and is chaired by Dan Chenier, General Manager, Parks, Recreation and Cultural Services and includes representatives from key City departments to ensure internal coordination in the development of the programming proposal. Phillips-Farevaag-Smallenberg (PFS) met between November 2010 and March 2011 with numerous community stakeholders to obtain input into the development of the park programming proposal, including representatives from: Ottawa-Gatineau Film and Television Development Corporation Rideau Canal Festival Members of the Festival Network Algonquin College Events Ottawa Irish Festival Dragon Boat Organizers Ottawa Folk Festival Ottawa Jazz Festival Childrens Festival Community Gardening Network Coordinator for Just Food Ottawa Farmers Market Ottawa Art Gallery Glebe Business Improvement Area (BIA) Glebe Community Association

32 Ottawa Marathon Ottawa South Community Association Commonwealth Historic Resource Management Ltd. Jill Anholt Studio Julian Smith & Associates

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

Urban Park Programming Public Input through On-line Survey An online survey was distributed to 115 organizations enabling them to provide their feedback on the urban park programming from 25 May 2011 through 15 June 2011. During this time, these organizations were able to share information and opinions, when responding to the survey. The consolidated results of public input from all of these forums was considered and influenced the development of the proposed park programming proposal which will be brought forward to Council for consideration subsequent to the LDRPs consideration and input on the draft programming proposal. Algonquins of Ontario A separate process has been established with the Algonquins of Ontario (AOO), Commonwealth Historic Resource Management Limited and PFS to develop the approach for the provision of interpretive elements highlighting and reflecting the culture and history of the Algonquin First Nations that will be integrated with, and form part of, the overall interpretive plan and public art strategy for the site. Advisory Committees City staff met the Arts, Heritage and Culture Advisory Committee and the Parks and Recreation Advisory Committee in the spring to provide them with information and obtain input on the public art and programming proposal and answer their questions. Consultation with the National Capital Commission (NCC) and Parks Canada The tripartite Steering Committee (comprised of representatives of the City of Ottawa, NCC and Parks Canada that was in place prior to Council approval of the Lansdowne Partnership Plan and Implementation report (Ref N: ACS2010-CMR-REP-0034) in June 2010 ceased. A new tripartite Committee was struck with a revised mandate focused on key areas including: transportation (including pedestrian and cycling considerations), south side stands, berm and

33 emergency routes, tree protection and integrated site plan considerations. The Committee meets on a monthly basis. Bank Street Reconstruction Advisory Committee Preliminary meetings were held 25 August 2010, with the Glebe BIA, Hydro Ottawa and City staff to discuss hydro burial and on 13 October 2010, with representatives of the Glebe Community Association, Glebe BIA, Ward Councillor Doucet, and City staff to discuss the issue of the burial of the hydro wires and the establishment of the Bank Street Reconstruction Advisory Committee (BRAC). Following the 8 March 2011 Council motion directing the acceleration of the Bank Street reconstruction, a BRAC meeting was held on 24 March 2011. The BRAC serves to disseminate information and provide input into the planning and ongoing implementation of the Bank Street reconstruction. Sub-Committees of the BRAC were established to deal with matters such as the intersection at Bank Street and Wilton Crescent and the Central Park Belvedere. Additionally, Block Captains were established under the auspices of the Glebe BIA. They meet weekly to obtain information and clarification regarding the progress of the reconstruction. The BRAC is comprised of the following members: Councillor David Chernushenko Catherine Henry Councillors Office Catherine Waters Glebe Community Association (GCA) Guy Gigure GCA Elizabeth Ballard GCA Christine Leadman Executive Director, Glebe BIA Allan Bateman Glebe BIA Gilbert Russell Glebe BIA Greg Best Glebe BIA Alex DeVries Citizens for Safe Cycling Joe Mojsej Bank Street Reconstruction Project Lead John Smit Manager, Development Review (Urban) John Wright Corush Sunderland Wright David Hatton IBI Group David Hook IBI Group Ziad Ghadban Manager, Design and Construction Wayne Newell General Manager, Infrastructure Services Zlatko Krstulich Transportation Planner Neil Stout Program Manager, Municipal Design & Construction Patrick Dare Corporate Communications Strategist Over 21 meetings occurred between March 30, 2011 and August 2011. As of August, Block Captain Meetings occur bi-weekly. Additionally, there are weekly construction progress meetings at the site attended by the contractor, subcontractors, the project manager, the project consultants and City staff.

34 Ongoing Activity The following information is available through Ottawa.ca: The Guiding Principles for the Lansdowne Transformation, prepared by the Lansdowne Strategic Design Review and Advisory Panel; Historical pictures and design renderings as they became available; The major project reports, news releases, backgrounder documents, a series of questions and answers, and timelines for the progress of the key work components on the project; Reports posted include: All of the reports received by standing committees and Council; The heritage studies; The Lansdowne Partnership Plan; Engineering reports; Public consultation findings; A number of reports on transportation, including the extensive terms of reference for a new transportation study; Retail studies, the request for proposals (RFP) for the retail study and market impact analysis peer review; The RFP for a new trade and consumer show facility; and, The RFP for the urban park competition;

The City Manager has issued memorandums to City Council to keep Council members informed about the Citys work on the project and to notify them about upcoming events, news releases and press conferences. COMMENTS BY THE WARD COUNCILLOR(S) The implications of this report are city-wide. The ward Councillor is a member of the LDRP however, has not been specifically apprised of the recommendations contained in this report. LEGAL IMPLICATIONS There are no legal impediments to approving the recommendations in this Report. RISK MANAGEMENT IMPLICATIONS There are risk implications. These risks have been identified and explained in the report and are being managed by the appropriate staff. FINANCIAL IMPLICATIONS

35 The total development cost of the stadium, arena and the parking infrastructure remains at $129.3 million as approved by Council in 2010 which was projected to be funded from air rights revenue ($10.2 million) and debt financing ($119.1 million). As stated in the Request for Offers Process Lease or Sale of Air Rights at Lansdowne Park report, in the event that the net amount from the air rights is not received, the City will be obliged to find other sources to finance the shortfall of the residential component under its contribution requirements to the LPP agreement ENVIRONMENTAL IMPLICATIONS The conditions for final site plan approval require the development of a sustainability plan and that the overall development and individual buildings strive to achieve the highest possible LEED ND and LEED Building certifications. Also, site remediation is required to address the site contamination confirmed through the Phase I and II Environmental Site Assessment (ESA) and this is also addressed through the conditions of approval. The City is working collaboratively with the Ministry of the Environment (MOE) on a management plan to address the environmental impacts at Lansdowne Park. The redevelopment of Lansdowne will be in full compliance with the Provincial Environmental Protection Act. To ensure that the sustainability objectives that have been established will be achieved, the sustainability strategy sets out a process whereby the detailed design development and construction would be undertaken through a compliance review process and through either a formal certification process (such as LEED ND or LEED Building certification) or a more informal process where a third party sign off is provided confirming that elements to achieve a LEED ND or LEED Building target have been met. Included in the standard conditions of the site plan approval given by Council in November 2010, is a requirement for site remediation to address the existing contamination that resulted from historical use at the site, most notably seepage of coal dust into the soil as a result of historical use of coal for heating and a landfill area where inert construction materials were deposited to fill in a portion of the historical inlet that extended into Lansdowne from the Rideau Canal. The MOE has been consulted regarding the Citys proposed management plan to address these site contamination matters to meet MOE requirements. The coal dust impacted soils are at the front of the Horticultural Building, in the vicinity of the former Coliseum Annex Building, with the closed landfill, located at the eastern portion of the site. From a technical perspective, the impacted soils include polynuclear aromatic hydrocarbons (PAH), heavy metals and petroleum hydrocarbons at concentrations exceeding the generic Table 3 MOE 2009 Standards for residential/parkland/institutional property use. As reported to Council in June 2010, and as required under the standard conditions of site plan approval given by council, a Record of Site Condition will be filed with the MOE to address the impacts in the areas of the Horticultural Building and former Coliseum Annex Building.

36 The original approach for the urban park identified the preparation of a due diligence risk assessment, however, after further consultation with the MOE, a formal Human Health and Ecological Risk Assessment and Record of Site Condition will be submitted to the MOE to address the impacts in the urban park area including the former landfill area as well as the encapsulation of impacted soils within the south side berm. The management plan that has been developed provides a sustainable approach to Brownfield redevelopment and will achieve LEED credits for an effective remediation approach. CITY STRATEGIC PLAN The Lansdowne Partnership Plan and revitalization initiative relate to the following: Sustainable, Healthy and Active City Objective 3 Expand the amount of City-owned green space in Ottawa Objective 6 require walking transit and cycling oriented communities and employment centers Planning and Growth Management Objective 1 Manage growth and create sustainable communities by: o Becoming leading edge in community and urban design o Ensuring that new growth is integrated seamlessly with established communities o Ensuring that new community facilities are built in tandem with new development SUPPORTING DOCUMENTATION Document 1: Lansdowne Partnership Plan Implementation Status Report - Graham Bird and Associates (GBA) DISPOSITION Subject to Council approval, staff will implement the recommendations as outlined in the report. The City Managers Office will ensure that status updates are provided to Council as set out in this report.