Wednesday , October 5 2022

Bagnall: Senator's trial may be required wakeup call for Ottawa, NCC


That was astonishing failure. For half an hour last Thursday, Board members in the National Capital Commission spoke for a resolution that would give RendezVous LeBreton's two main partners – Ottawa Senator's owner Eugene Melnyk and Trinity Development founder John Ruddy – two months to "get their actions together."

The Board members were unanimous in their view that the government would not once blame the lack of progress on a larger project, in this case a potential historical deal for developing a 53-hectare package of vacant land west of Parliament Hill.

The problem they agreed was entirely within the RendezVous LeBreton team – an assessment that appeared to be confirmed the following day when Melnyk launched a $ 700 million costume against Trinity under the terms of the "failed joint venture".

Eugene Melnyk was all smiles after his bid was chosen as the preferred bid for the Lebreton Flats conversion in Ottawa on April 28, 2016.

Jean Levac /

Ottawa citizen

Left invisible Thursday, however, was another reality – perhaps only NCC and the city bear a significant responsibility for this failure.

The more you break down the parts of the commercial projects in the heart of LeBreton and nearby developments, the easier it becomes to see how the two levels of government exert a profound influence over the actions of Ruddy and Melnyk.

The result is this: The city and NCC created a game field that put Ruddy and Melnyk financial interests against each other. They did it by pursuing goals that worked in cross-section.

The city – determined to ensure the success of its 2.1 billion alarm system – encouraged the development of historically tall tower at 900 Albert St. and other stops, while NCC continued the $ 4 billion project to restore LeBreton, just north of the Albert Street site.

Canada's Diamond Jublilee July 1, 1927 is celebrated in this parade in LeBreton Flats, which at that time was unfaithful to humans.


City and NCC officials assumed that there would be plenty of demand for homes and stores that would ultimately pay for both projects. Despite significant reprisals of Melnyk at this time in the past two years, politicians preserved this view, partly supported by a real estate study comprised of Trinity.

But consider the more cautious report on LeBreton's economy prepared by the company PwC. Yes, it was ordered by Melnyk, but its conclusions are supported by independent tasks.

The story in the report, as outlined in Melnyk's assertion, is that Ottawa once again has the opportunity to create a kind of Times Square in the empty LeBreton quarter. However, PwC concluded the extensive scope of Trinity's $ 400 million apartments and 900 Albert retailers – with nearly 1,400 proposed units – would result in a rival business area in an area in the city that has financial wealth to support only one.

Ottawa Senator's owner Eugene Melnyk.

Tony Caldwell /

Postmedia Network

Furthermore, PwC notes that the early commercial benefits belong to Ruddy. Not only would 900 Albert be the first to market their apartments, PwC notes, but it would have bigger economies of scale because it is longer and requires less expenses to prepare the site of construction. Trinity should therefore be able to sell comparable units for less than would be the case at LeBreton Flats.

PwC's research points to the need for a master's development that includes both LeBreton Flats and 900 Albert, one that would create a single center focused around the arena.

Under the terms of the agreement signed in 2015 between Trinity and Melnyks subsidiary, Capital Sports Management Inc., Trinity was responsible for lining up lenders, condo buyers and retail tenants, while Melnyk's job was to finance and build the stadium and related sports entertainment facilities . The money to pay for all this infrastructure was to come from condo buyers, retailers, NHL ticket supplements and other flows of revenue.

LeBreton Flats: Still a blank field.

Jean Levac /

Postmedia News

In order to function, the LeBreton project demanded a critical mass of shoppers, ticket buyers and people who called Flats. Melnyk's major concern, as detailed in his suit, was that 900 Albert would empty potential revenues, leaving his part of the RendezVous LeBreton project cool with money.

Certainly Ruddy seemed to face fewer financial risks at the moment. Although the Ottawa developer undertook to finance the bulk of the LeBreton project (about $ 3.4 billion of a total of $ 4 billion), the cash requirement was spread over two decades. For example, it was expected that the project would estimate 2,400 apartments built by 2032, the end of the first phase. Another 2000 or so would follow.

Melny's proposed $ 600 million arena was in sharp contrast meant to serve as a center for LeBreton in 2022. Melnyk seems to have sufficient assets to stop funding – provided he could produce an income prospect potential lenders could accept. This meant that you could expect a lot of traffic in and around the arena in a relatively short order.

His nightmare involved building the arena just to have to wait for 900 Albert condos to sell out before significant traffic arrives at LeBreton.

Was he entitled to worry that Ottawa's housing rights in central homes lack the mojo to support both projects?


The ongoing sales effort at Zibi – the 37-hectare residential building office development just north of LeBreton Flats – suggests he was. The $ 1.2 billion project, which aims to sell 2,000 apartments and other homes over the next 20 years – together with one million square meters of retail – is going to a very deliberate pace. Over the past 12 months, Zibi has sold or negotiated to only 25 apartments, according to the latest funding applications from Zibi's parent company. Since it started marketing apartments in 2015, unit sales were two weeks ago 117.

Site plan for Zibi.

Zibi had projected to sell as many as 100 units a year on the Ontario side of the project alone.

Ottawa is generally a rich city but grows slowly – The Canada Conference estimates that the population in the metropolitan area will increase on average 1.1 percent per year until 2022. It is not a good base for supporting aggressive marketing.

It's nice to think that the region is on the renaissance of urban development, but it's only possible. Melny's trial is a much needed wakeup call. Is NCC and the city sure they are right? Better to check now than three years in. It would have been even better to meet the warnings from Melnyk a few years ago.

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