LeBreton: the options on the table

The National Capital Commission has one more chance to get the LeBreton Flats project right following the eruption of a legal war between Ottawa Senators owner Eugene Melnyk and Trinity Development founder John Ruddy.

The businessmen are partners in RendezVous LeBreton, which two-and-a-half years ago became the NCC’s preferred bidder to effect a $4-billion transformation of the historic downtown site.

All day Monday, these and dozens of other parties with an interest in helping to remake LeBreton, were busy working out the many permutations available to the NCC. Among the latter: starting anew with a fresh procurement; launching direct negotiations with Devcore Canderel DLS — the runner-up in the 2016 contest to produce a vision for LeBreton Flats — and mixing and matching partners that might be compatible with either Melnyk or Ruddy.

“At this stage we’re not talking about new partnerships,” said Jean-Pierre Poulin, president of Gatineau-based Devcore and spokesperson for the runner-up group, “It’s us or the other team”.

The NCC has given Melnyk and Ruddy until the last week of January “to get their act together”. The temptation for the federal government to try to broker a deal remains strong. The Liberals don’t want to head into next October’s federal election with LeBreton Flats unresolved — not when they will also have to wear most of the failure for the Phoenix pay system fiasco.

In any case, the NCC and RendezVous LeBreton have already invested millions of dollars to lay the groundwork for a community that would eventually include 4,400 residential units, 800 hotel rooms, 1.5 million square feet of office space, 1.3 million square feet of retail outlets and, of course, the signature NHL arena. The thought of starting over again must be deflating.

But after Melnyk sued Ruddy on Nov. 23 for allegedly undermining their joint effort, the idea that RendezVous LeBreton will soon be able to get on with the project is a long shot.

In which case, what then?

Devcore — which heads a consortium of Montreal and Ottawa money and expertise — has declared it is willing to step in immediately.

Which sounds like a wonderful quick fix — until you consider a couple of pieces of reality. First, it’s not clear that the NCC will be able to start those talks without first conducting some sort of competition, not least because it’s been years since the Crown agency last analyzed Devcore’s bid. Not only that, the economics of the LeBreton project have also changed since 2016, most notably the costs of building the various public venues.

The second piece of reality for Devcore concerns the NCC’s five-member evaluation committee, which included chief executive Mark Kristmanson. The evaluators two years ago ranked RendezVous LeBreton’s 2,000-page bid “clearly” ahead of Devcore’s proposal.

The precise failings of Devcore’s bid haven’t been made public, but a source familiar with the NCC’s evaluation said the inclusion of an assortment of odd projects with uncertain economics — wind tunnel, skateboard park, aquarium and automotive museum — was a factor.

Nevertheless, there are enough core elements in the runner-up bid to serve as a starting point should the NCC exercise its right to start the competition anew.

Certainly the Devcore group, which includes Montreal billionaires André Desmarais (Power Corp.) and Guy Laliberté (Cirque du Soleil), along with JDSU co-founder Bill Sinclair, appears to have substantial financial backing. And among its many projects is a plan for an NHL-scale arena.

The Devcore team has left things open for Melnyk who, after all, owns the NHL franchise and has real leverage here. Devcore has offered to build the arena and rent it to the Ottawa Senators, or allow Melnyk to build the rink himself. Also on the table: If Melnyk wants to sell the team, he will find a willing buyer in the Devcore group, if the price is right.

From the NCC’s perspective, a deal with Devcore would likely avoid the problem at the heart of the dispute between Melnyk and Ruddy, who is developing a separate apartment-and-retail project at 900 Albert St., just to the south of LeBreton Flats.

Melnyk claimed in his $700-million lawsuit against Ruddy that the 900 Albert St. development, which includes 1,300 apartments, would undercut demand for residential units on LeBreton Flats. These condos and other housing units are a key to financing the RendezVous LeBreton project.

“We don’t see 900 Albert as a problem for us,” said Devcore’s Poulin, “Our plan is to build 2,000-plus mixed (apartments and condos) units over a long period.” That’s less than half the number forecast to be built by the RendezVous LeBreton group, making it less likely 900 Albert would be a factor in slowing overall condo sales on the Flats.

Ruddy has yet to file a statement of defence, but a real-estate study he commissioned earlier this year by Urbanation Inc. suggested the downtown Ottawa market for rental and condo properties was strong enough to support his participation in both RendezVous LeBreton and 900 Albert.

Another option available to the NCC is to start from scratch and adopt a less risky procurement. It could do so by dividing the 53-acre parcel into multiple segments — each of which would be subject to a competition for the best ideas. NCC could set the overall direction by designating each parcel for a certain use — housing, retailing, hotels, public space. If one project fails, it won’t necessarily jeopardize development of the entire site.

The disadvantage of such an approach would be the extra time involved. “A new request for proposals would delay things by three years or more,” Poulin claims.

Against the more than 20-year horizon of the project, that doesn’t seemed exorbitant. Something more for the NCC to ponder.


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