Lansdowne agreement done in good faith: city

Incorrect information — presented to Ottawa city council — concerning the city's stake in the redevelopment of Lansdowne Park, was not given in bad faith, the city's lawyers said in documents prepared in advance of next week's court case.

The group Friends of Lansdowne is taking the city to court over the legality of the city's $300-million partnership with the Ottawa Sports and Entertainment Group, which will oversee renovations of Frank Clair Stadium and build a mix of condominium and retail space in the rest of the park.

Among the allegations presented by Friends of Lansdowne is the assertion that there are "discrepancies" between what council approved in June 2010 and the actual deal with OSEG — in particular, the calculation of the city's equity in the project and the city's return on that equity.

Friends of Lansdowne lawyer Steven Shrybman said council voted to invest $172 million in Lansdowne and was given information that suggested the city's equity would equal $76 million. The equity calculation is important as councillors were told the city would receive annual payments equalling eight per cent of the equity.

But city manager Kent Kirkpatrick admitted in cross-examination that the city's equity was actually $13.5 million, and that the formula in the agreement framework approved by council did not reflect this total because it didn't include costs the city would no longer have to pay to manage Lansdowne.

The city's lawyers conceded the mistake, as well as another found in a slide explaining the city's return on its equity, but said these were unrelated mistakes made in good faith, and that the city's return on equity totals were based on the $13.5 million equity figure.

"Honest mistakes by City staff do not equate to bad faith," the city's lawyers said in their factum in advance of next week's hearings. "It cannot be said that City Council acted in some unfair, oppressive or partial manner by passing the by-law at issue, despite the mistakes by staff...."

Friends of Lansdowne have taken the city to court over the deal with OSEG, arguing the city acted illegally when it approved a sole-sourced contract worth $300 million with OSEG.

Sole-sourcing justified: city

The city's lawyers argue the city was justified in sole-sourcing the project because 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.

The city and Friends of Lansdowne legal filing also differ on how much the Lansdowne deal will cost the city, in part because they have different standards on how to define costs and revenue streams.

Friends of Lansdowne argued the deal wouldn't be "revenue neutral" — that is, that the city won't be receiving enough tax and other revenue generated from Lansdowne to offset the costs of the project

But city lawyers said council knew the goal of revenue neutrality would be defined in a more narrow manner, one which focused on whether cash on a yearly basis matched or exceeded expenditures, and therefore did not impact the city's annual budget.

The court proceedings resume on Tuesday.