Special newsletter: November 6, 2025
Lansdowne 2.0
Hi everyone!
I’m back again for a second time this week with an off-cycle newsletter about Lansdowne 2.0.
Tomorrow (November 7), a special meeting of City Council will be held to consider staff’s final report on Lansdowne 2.0. This is the vote to decide whether to proceed with the project or not.
While the immediate financial implications are relatively low, the long-term financial risks are my primary considerations in not supporting the project. Alongside the rationale for my position, this extra newsletter includes relevant information about the project, which I hope is helpful, given some of the mis- and disinformation that’s been circulating.
I had hoped to include this in my regular Tuesday newsletter this week, but there was too much material for me to read and get through.
Background
How did we get here? Full history of the site here, for those interested.
The City of Ottawa-OSEG partnership includes an annual report to City Council with updates on operations, revenues, and other relevant information about the site.
The 2019 annual report highlighted financial challenges to the partnership, including a request by OSEG to extend the life of the partnership, and that the operational and financial challenges of the north side stands, and the arena were under review.
That was followed up by the 2020 annual report, which noted the financial pressure on OSEG plus challenges with operating and maintaining the north side stands and arena. Work was underway to increase traffic to Lansdowne on non-event days, but the start of the pandemic placed unforeseen pressures on that plan.
The 2020 annual report therefore recommended an approach to begin the conversation to address the challenges to long-term sustainability of the partnership. City Council approved amendments to the partnership to ensure it would survive the pandemic, including:
Allowing OSEG to access the building lifecycle reserve (basically a maintenance savings account) for three years to stabilise itself
Extending the partnership from 30 to 40 years, to end in 2054
Eliminating the need to pay the city additional rent if additional investors were added to the retail component of the site
Though the measures helped OSEG through the worst of the pandemic, it was unlikely to address any financial sustainability pressures raised since 2018. The city and OSEG struck a staff working group in December 2020 to explore other options.
In June 2021, City Council approved a sustainability plan and next steps report for Lansdowne. It included a structural assessment of the north side stands and arena, which were deemed functionally obsolete.
The report also directed staff to propose a strategy to attract more people to Lansdowne, including more housing and retail, developing programming to expand public realm usage, and other safety improvements.
That work culminated in a May 2022 report, when the previous term of City Council approved a preliminary Lansdowne 2.0 concept plan, which included a rebuild of the north side stands, a new standalone arena, and new retail and residential units, estimated to cost $332.6 million.
Like the original Lansdowne redevelopment, a financial arrangement was proposed to pay those costs, including long-term debt to be repaid through the site’s property taxes, ticket surcharges, and the sale of air rights, and other cashflows.
In November 2023, a revised plan was presented to the current term of City Council. Briefly referred to as Lansdowne 2.1, it proposed a reduction from three to two residential towers, a reduction in retail space, and an increased cost estimate of $419.1 million ($312.7 million of that as long-term debt paid through the financial arrangement mentioned earlier). No notable changes were proposed for the north side stands and arena.
City Council approved the revised plan and directed staff to finalise project details and to build out a development process, including selecting a construction bidder. A public consultation plan was also mapped out. At that time, I voted to support following through with the planning process, despite my discomfort with the new financial arrangement.
The final staff report with the results of the planning, development, and procurement processes, as well as updated project details and a recommendation to go ahead with the project, was released to Councillors and the public two and a half weeks ago.
The report was approved by the Finance and Corporate Services Committee last week. The report will rise to the special meeting of City Council tomorrow, November 7, for discussions and amendments before a final vote to approve or reject the Lansdowne 2.0 redevelopment (the actual go/no-go vote).
As I am not a member of the Finance and Corporate Services Committee, my only vote is at tomorrow’s City Council meeting.
Project details
Physical built form, construction timelines, and cost.
Lansdowne 2.0 replaces the existing north side stands and arena combined structure with new stands and a standalone arena (referred to as the event centre in the staff report). The stands will be in the same location, while the arena will be located just east of the football stadium’s eastern endzone, where the berm and art installation are now.
The arena will have a capacity of 6,600 for hockey games (5,580 seated) and about 7,000 for concerts, while the new stands will have 12,400 seats.
Two residential towers up to 40 storeys in height, with about 770 units split between condominium, rental, and hotel units, will be built behind the new stands atop a two-storey podium with retail. The retail-residential structure includes a grand entrance towards the new stands.
Underground parking will also be constructed under the retail-residential structure, but its 140 parking stalls will be leased to the residential developer.
If approved, construction will begin later this year, starting with the arena, then the demolition and rebuild of the north side stands, followed by the retail-residential structure.
Staff anticipate arena construction will be completed mid-2028, with an expected demolition/rebuild timeline for the north side stands from late-2028 to late-2030.
Following that, construction is expected to begin on the retail, residential, and grand entrance early-2031, with anticipated completion in 2033 (retail and grand entrance) and late-2034 (residential).
Ongoing repairs to the Aberdeen Pavilion, unrelated to the Lansdowne 2.0 project, will continue until late-2028.
The total construction cost is $418.8 million, broken down as follows:
North side stands – $119.4 million
Arena – $180.8 million
Grand entrance – $5.3 million
Design, site work, support – $60.3 million
Contingency and escalation – $37.0 million
Business interruption – $16.0 million
The underground parking ($19.2 million) and retail podium ($45.9 million) are costed separately and not included in the $418.8 million, as there are separate arrangements to fund those elements—the parking will be leased to the residential developer, while OSEG will reimburse the City for the retail podium.
The fixed price contract was awarded to EBC Inc., who will construct the arena, north side stands, and underground parking. Mirabella Development Corporation, the highest bidder on the air rights, will construct the residential buildings, retail podium and grand entrance to the stadium (the latter two to be transferred back to the City upon completion).
As Lansdowne is a municipal asset, the City of Ottawa retains ownership of the land. It will also own the new stands, arena, underground parking, retail podium, and grand entrance, while the residential development above the retail will be privately-owned through an air rights purchase. More on the air rights purchase in the next section.
Financing
Funding sources to pay for the project. All figures in 2025 dollars.
The $418.8 million construction cost will be split between $331 million in long-term debt and $87.8 million in near-term funding.
The $87.8 million in near-term funding includes:
Municipal accommodation tax (MAT) – $6 million
Air rights sale proceeds – $34 million
Internal (City) funding – $48 million
The MAT is a five-per-cent levy applied to hotel stays built into the cost of the room. It was implemented in 2018 and is used to fund tourism marketing and activities.
A one-per-cent increase to the MAT is proposed, which is expected to generate about $5 million in added revenue, 40 per cent of which will go towards funding Lansdowne. Staff initially proposed using $2 million of the additional MAT revenue for Lansdowne, but Committee amended that to the percentage as to capture future increases in MAT revenue (e.g. when new hotels open).
The first three years of the additional MAT revenue will contribute to near-term funding, while future years will be used towards servicing the long-term debt.
The air rights sale proceeds come from the residential developer, who will pay for the rights to build above the retail podium (since the City retains ownership of the land and retail podium).
The developer will pay $65 million in air rights, $34 million of which will go towards near-term funding for Lansdowne. The remaining amounts will go towards affordable housing as well as offset the costs of the retail podium and underground parking.
Meanwhile, the $331 million debt will be issued in 2030, to be repaid starting in 2031 until 2070 in annual payments of $17.4 million from the following sources:
On-site property taxes – $69 million
Municipal accommodation tax (MAT) – $38.1 million
Ticket surcharge – $15 million
Rent paid to the City by OSEG – $7.7 million
Return of City equity from waterfall – $118.4 million
Citywide property tax revenue – $82.7 million
Known as the property tax “uplift,” a significant portion of the debt will be serviced by a portion of the property taxes generated by the residential and retail to be built as part of Lansdowne 2.0. Over the 40-year term, 75 per cent of property taxes from the new residential and retail will go towards debt servicing.
As mentioned earlier, 40 per cent of new revenue from an increase to the MAT will be used to service the Lansdowne 2.0 debt. As it is a percentage of new revenue rather than a flat amount, it is possible new MAT revenue may offset the citywide property tax portion of debt repayments.
Ticket surcharges are expected to provide about $700,000 annually across the term of the debt, while OSEG will begin paying $500,000 in annual rent to the City in 2031 (they currently pay $1 annually in rent).
Lansdowne 2.0 proposes improving the City’s position within the waterfall agreement (distribution of revenue). In the current arrangement, OSEG is entitled to distributions of revenue generated by the site before the city, while the proposed new arrangement places OSEG and the City equally. Distributed amounts will be based on the share of equity each party has contributed to Lansdowne 2.0. The city will use its distributed amounts for debt servicing.
Lastly, the remaining $82.7 million in long-term debt will be funded by citywide property tax revenue, at an average of $4.3 million per year.
In total, $130.7 million in taxpayer money will fund Lansdowne 2.0, while the remaining $288.1 million will be funded by projected new revenues generated on site.
As mentioned in the previous section, the costs of the retail podium and underground parking are not factored into the figures above, as there are separate arrangements to fund them.
What I like
From a facilities upkeep, accessibility, and fan/user experience perspective, Lansdowne 2.0 will improve the site and create opportunities for the city. The new residential addition will also locate more people on site permanently, improving the economic viability and overall vibrancy of the site (or at least less dead on the quietest days).
Ottawa will also no longer miss opportunities to host medium-sized events that currently skip the city due to the condition of the existing building.
Additionally, the new stands and arena will conform with modern accessibility standards and legislation, something not physically possible within the envelope of the existing combined structure.
The economic impact of the project during construction and after construction also stands to benefit the city and surrounding areas through direct capital and operational spending, supporting industries that supply goods and services, and employees spending their wages on consumer goods.
Construction throughout its course is estimated to contribute $574 million to the GDP, $403 million in wages, and almost 5,500 jobs in Ottawa, while operations after construction is estimated to contribute $92 million to the GDP, $76 million in wages, and almost 1,500 jobs in Ottawa every year.
It’s also important to note there will be several downstream benefits Lansdowne 2.0 could deliver to the regional economy, such as additional investments in retail, entertainment, and further residential development.
The air rights sale will contribute $14.4 million to the affordable housing reserve, which will benefit projects across the city. (Note: there is a deferred motion to revise the affordable housing contribution upwards, to be discussed at tomorrow’s Council meeting.)
Lastly, the waterfall agreement for Lansdowne 2.0 will also be revised so the City and OSEG receive their distributions at the same time, rather than OSEG first. However, like the waterfall agreement for Lansdowne 1.0, what is distributed is still contingent on the site’s performance.
What I don’t like
The numbers on their own seem simple—the city would benefit greatly from getting $418.8 million of assets for $130.7 million (and also not have to operate the facility).
However, the funding sources for debt servicing have potential to be fluid and impacted by external factors like changes in the residential market and the economic situation.
A sizable portion of the debt will be serviced by the site’s property tax uplift, based on property taxes to be generated with a 50-50 split in condominium and rental units within the residential development.
Condominium units generate more property taxes, so any shifts in the residential market that may increase the share of rental units will negatively impact the debt servicing load on other sources (the citywide tax base). In fairness, if the share of condominium units increases, the load on other sources will decrease.
Additionally, though there are risk mitigations to ensure the residential development actually proceeds at the appropriate time, delays in the arena and north side stands construction that renders the City unable to transfer the air rights to the developer by July 31, 2031 will result in a $13 million penalty payable to the developer.
The other significant portion of the debt servicing plan is dependent on the performance of Lansdowne, as it relies on waterfall proceeds and ticket surcharges to service the $331 million debt.
Tuesday’s federal budget offers little assurance and comfort in that context. With public service job reductions expected over the next half decade, residents are likely to either have less disposal income or spend less of it (e.g. changing from season tickets to single game tickets or attending fewer events), right when Lansdowne 2.0 is expected to be complete and debt servicing begins.
Additionally, none of the projections of the original Lansdowne project materialised. In fact, the 2025 Lansdowne annual report notes an 11th straight year with an operating loss and the partnership has yet to have a balanced or profitable year.
Although Lansdowne 2.0 is the plan that hopes to address that, it also proposes a revised financial arrangement that shifts new operational funding risks and all of 2.0’s construction cost overruns onto the City.
Under the original Lansdowne redevelopment agreement, OSEG bears all the construction and operational cost overruns and shortfalls of the partnership.
There is risk in every project, including projects within a municipality’s core mandate (e.g. contractor bankruptcy in a road project), so it’s unreasonable to expect Lansdowne 2.0 will ever be risk-free to the city.
However, unlike a municipal project, the factors influencing the risks of Lansdowne 2.0 are much further out of the City’s control or ability to mitigate, including some where solutions may simply not be achievable by a municipal government.
For example, even with the solid promise from OSEG, a sports team may still become unable to remain in Ottawa. The city would have no means of replacing that, which is particularly risky given the portion of debt servicing that is made up of event revenues (waterfall).
Other examples include residential market slowdown (to the point where the developer cannot build), substantial cost escalations and delays in construction, and an involuntary exit by OSEG.
While the financial arrangement is solid on paper, individual supporting elements may not be. It’s like good glue holding weak materials together—the glue might remain, but the materials can break off.
It’s a completely different order of risk that public money isn’t meant for.
Conclusion
Lansdowne 2.0 is full of nuances, even though the Council vote is binary. It’s not as simple as “we shouldn’t subsidise sports teams,” because the land and facilities are owned by the city.
This is also not a question of spending money on Lansdowne versus a core municipal service. The money to be spent on Lansdowne (other than some of the near-term costs coming from capital reserves) doesn’t yet exist and won’t exist unless the project is approved.
Negative cashflows for 11 straight years logically makes investing more money into Lansdowne a bad decision, but Lansdowne 2.0 is the plan to address those performance shortfalls.
While risks are generally expected with any significant investment, the risks tied to this project are in a different order of magnitude than any risk associated with “normal” municipal projects. To use a sports analogy, I think we’d be playing in the wrong league.
Unfortunately, the discomforts I was willing to park in 2023 to support following through with the planning process mostly remain, so I can’t vote to support proceeding with Lansdowne 2.0.
I believe this project has great potential to further transform and improve the site, but the level and magnitude of risk outweigh that and the cost of “doing nothing.” The existing agreement with OSEG will continue to live out its life to 2054, during which time a right solution may come along.
-Wilson