Lansdowne sole-sourced deal questioned

The lawyer for Friends of Lansdowne argued Ottawa Sports and Entertainment Group's ability to deliver a CFL franchise to Lansdowne Park was not enough of a justification for the City of Ottawa to enter into partnership with the group.

On the second day of proceedings over the city's deal with OSEG, Friends of Lansdowne lawyer Steven Shrybman took aim at the city's decision to sole-source the $300-million project.

The citizensgroupwants theagreement between the city and OSEG scrapped because,it argues, the deal was not done transparently or with proper accountability. Meanwhile, the city wants to get started on a redevelopmentdeal thatit says has always been done in good faith.

The city has said in its arguments that OSEG is the only group capable of redeveloping Lansdowne Park and at the same time securing a Canadian Football League team and a junior hockey team as tenants.

But Shrybman said the city's justification doesn't stand up when compared with the terms of the deal with OSEG.

Under the requirements of the Lansdowne partnership, OSEG is obligated to keep the CFL team at the stadium for five years, but the terms of the lease for the stadium and retail space is a minimum of 30 years.

The city has countered the anchored tenant of the CFL or OHL franchise is central to a viable redevelopment plan.

Friends of Lansdowne lawyers say the city broke its own municipal bylaws by defining the deal so narrowly that only one group could meet the needs of the tender.

Said Shrybman: "The CFL franchise is a device, it's not a necessary ingredient to the projectit isa tail trying to wag a very big dog."

In notes from a confidential meeting in March 2009 that was entered as evidence, OSEG's Roger Greenberg told city staff that the franchise wasn't critical to the project's financial success.

"If the CFL fails in five or six years, you'll have other lines running,like commercial ones..." the notes say Greenberg said at the time.

However, thecity says it didn't break anyrules because there was a lack of competition and the bylaw says the city manager can approve a non-competitive contract.

Partnership favours OSEG, group alleges

The Friends of Lansdowne lawyersalso say thebusiness partnership weighs heavily in favour of OSEG.

Friends of Lansdowne allege the city provided OSEG leases at below market value, provided financial assistance to acquire and operate CFL and OHL franchises, and gave preferential terms for OSEG to get money back from their investment in the deal.

In particular they have pointed to a number of errors in what was presented to council regarding the "waterfall" payment scheme, where payouts on the return on investment are paid to the city and OSEG with certain "levels" having priority over others.

Friends of Lansdowne lawyers have pointed out the city distributed information about the waterfall scheme with errors, including an error that mistakenly placed payments made out to both the city and OSEG in priority ahead of payments paid to OSEG based on its additional equity. In reality, Friends of Lansdowne argued, OSEG would receive these "level three" payments ahead of the split payments.

The city has admitted the error appeared on some slides presented to council, but that the error was an honest mistake done in good faith. This incorrect informationwas still on the city's website as of Tuesday.

It was just under a year ago that Ottawa city council voted to form a public-private partnership with OSEG to renovate Lansdowne Park.

Under the deal, OSEG will oversee renovations of Frank Clair Stadium, and build a mix of condominium and retail space in the rest of the park.

Senior Justice Hackland set aside two-and-a-half days this week and another three days in the last week of June to hear the case.