My update to residents: a new and improved Lansdowne 2.0
As many folks know, I have had serious concerns about the Lansdowne 2.0 proposal presented by City staff. My biggest concerns related to the cost of the plan and the fiscal picture. I have also shared serious concerns that the City should not be involved in the venture, mostly because of the risks associated and the fact that the costs were returning unclear benefits to the City. There is a clear need for public investment into programs and services that benefit the public; I noted that, in my view, Lansdowne 2.0 as originally presented did not fit the description of a public good.
Even so, I have kept an open mind. From the beginning, I indicated my view that there should be a new plan for the site. I have been working behind the scenes with colleagues on such a plan, and I am happy to share with the community what we have arrived at, and voted in favour of, as a result of this work.
This isn’t the final decision. There are still two opportunities for Council to pull the plug.
Changes to the plan
The following are the changes that have been introduced to the Lansdowne 2.0 plan and future Lansdowne processes:
The estimated net-total annual cost to taxpayers of $5 million will be funded out of efficiencies found in the City rather than as new costs to taxpayers. I will be working with colleagues and the Mayor’s office to advance this prior to the next decision on Lansdowne.
Additional density will be added to the second apartment tower to increase revenues and housing.
City staff will be directed to return to Council with information and options for leveraging or potentially selling certain City-owned Lansdowne assets to offset costs.
The plan includes offramps that are available to Council to ensure that the Lansdowne 2.0 plan works before a final decision is made.
These are all components that colleagues and I advocated for very aggressively. This updated plan is, in my view, the best plan for the City that will also receive Council support.
What the changes mean
Even so, this is the net effect of what this plan means:
By finding $5 million in annual efficiencies, taxpayers will realize $150 million in savings over 30 years. This is more than 50% of the estimated subtotal of construction costs and is roughly the same as the estimated net-total-cost estimated by the City when revenues are considered.
By increasing the density on the second tower, more revenues in the form of air rights and additional tax revenue will be realized by the City.
These efficiencies and the increased tower size mean that the plan could be revenue-positive for taxpayers, though this will need to be confirmed in future estimates
By directing staff to assess the costs and benefits of selling assets at Lansdowne, the financial risks to taxpayers are effectively eliminated. Already, the value of the assets that the City owns, combined with the efficiencies that will be realized, are likely about the same as the estimated costs of Lansdowne 2.0 including interest; given that the assets will be more valuable after the 2.0 plan, there is a potential for the City to make money off the plan while retaining the key benefits of Lansdowne to residents.
The offramps mean that the decision made at Council was not the final decision. This most recent decision provided staff and OSEG with the resources necessary to move to the next step, getting us closer to a final estimate of costs rather than a speculative estimate. It provides Council with future opportunities to reassess.
Additionally, in reviewing the plan and partnership agreement in detail, I am reasonably satisfied that the financial plan – while beneficial to OSEG’s operations and the sports teams that use the facilities – will not result in undue private sector profit from public sector investments. The City’s equity investment is expected to be returned through revenues generated, and the City’s investment will receive a return prior to any profits being realized at OSEG.
If some of those revenues do not materialize, the debt can be settled through the sale of assets. The previous plan merely hoped that revenues would be realized, whereas the updated version effectively has a contingency plan.
In my meetings with City staff and OSEG, it became clear that my ideal plan – to sell the assets as they exist presently – was unlikely to find a buyer, whereas exploring that as an option later in the process is the approach most likely to reduce costs onto taxpayers. That is to say, the approach that we have settled on is the one most likely to support the development of Lansdowne and reduce risks and costs onto taxpayers.
I remain concerned about the financial picture for the site, about the diversion of tax-uplift to support it, and about the fact that the City should not be in this business in the first place. I still think improvements can be made to the plan with respect to managing transit and transportation. Even so, where we are is much better than where we started.
The updated plan satisfies enough of what is necessary to get us to the next step and ensures that Council still has opportunities to reassess the plan. To be clear, the vote before Council on this plan is not final approval as there are many other off-ramps available to Council to consider before the plan is given final approval. If the financial picture appears unsatisfactory as we proceed through the next set of decisions before Council, I will not support it.
. The updated plan has a considerable amount of what I was looking for by improving the financial picture, reducing risks to taxpayers, providing clear off-ramps, and putting forward an option for the City to return certain assets to the private sector. It is a compromise, but it is not a compromise on my core values of protecting taxpayers and the public interest.
With all this in mind, I did vote in favour of moving Lansdowne 2.0 to the next step of its process. And as there are more offramp opportunities in the future, I will be reserving my final opinion on the overall plan until staff provide Council with a final estimate of costs.
I know there will be some residents who are quite concerned that I made the wrong call on this. I respect that view, though I submit that the plan Council voted on is very different than what was proposed a few weeks ago. The financial picture is improved, the long-term risks are reduced, the offramps are clear, and the prospect for getting the City out of this business (and generating revenues for the City in the process) is very much on the table. This is a substantially different plan than what was presented a few weeks ago which is why I feel comfortable supporting it at this stage.