Today, the Audit Committee received a report from the Office of the Auditor General (OAG) on the City’s Lansdowne Redevelopment Plan, which focused on financial aspects of the project including due diligence and cost estimates.
The audit is the first report in the OAG’s agile audit approach to the Lansdowne redevelopment project, in which reports examining various aspects of the project will be delivered on an iterative basis. This approach to auditing the Lansdowne project was approved by Council in June 2022.
The redevelopment plan would bring about a revitalization of the Lansdowne site, including the construction of a new event centre, new north-side stands for the outdoor stadium, and two new residential towers with retail space.
In the report received today, the OAG noted that the City has made a “significant effort” to engage internal and external experts in determining the financial projections and assumptions associated with the project.
However, the OAG's audit report highlighted that the City's estimate of $419.1 million was on the lower end of acceptable ranges for a Class C estimate and could be understated.
The City’s projected Class C estimate cost was based on intimate knowledge of the site, including access to utilities, the condition of existing structures and other factors. This estimate will be further refined as the project progresses.
Council will be presented with a final construction cost and updated funding strategy by the end of 2025 for their approval.
The audit also highlighted risks associated with the specific assumptions in the City’s projections under its “waterfall” financial agreement with the Ottawa Sports and Entertainment Group, which sets out how cashflows from Lansdowne will be distributed over a 40-year period.
The OAG’s report recommends that the City review and update its internal guide to clarify how cost estimates are determined, and to continue to incorporate recent actual results and use modest financial assumptions in its cashflow projections.
City staff agree with the recommendations. Updates to the internal guide concerning cost estimates and to the project’s waterfall distribution projections are planned by the end of 2025.
The report will rise to City Council on July 10, 2024.
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