The Ottawa Senators appeared on their way towards a new arena closer to downtown, but a series of disagreements between team owner Eugene Melnyk and Trinity Development Group Inc. chair John Ruddy has put those plans on hold. Melnyk sued Ruddy for $700 million, who then countersued Melnyk for $1 billion on Tuesday. Then, the National Capital Commission announced it was moving towards terminating its development deal with Melnyk and Ruddy on Wednesday.
Here’s where the situation stands, and how it got to this point.
Where is LeBreton Flats?
Located 1.5 kilometres west of the Parliamentary Precinct, the LeBreton Flats are a 21 hectare (52 acres) parcel of land, just down the hill from Parliament Hill.
Is the land vacant?
After the War of 1812, LeBreton was part of a major trade route along the Ottawa River, and developed into an industrial area until the end of World War II. A massive fire in 1900 destroyed the site, but it was rebuilt.
Through the 1950s, LeBreton was a mix of industrial use and row housing but in the 1960s, the federal government expropriated the area to make room for a new government campus. Ultimately, the planned government offices were located elsewhere and the Flats remain virtually vacant to this day. The National Capital Commission (NCC) became custodian of the site in the 1960s. Among the recent developments in LeBreton are the War Museum, built in 2005, and the National Holocaust Monument, which opened in 2017.
What is the NCC?
As sourced from its web site, the National Capital Commission is a federal crown corporation created by Canada’s Parliament in 1959 under the National Capital Act. Its predecessors were the Federal District Commission of 1927 and the Ottawa Improvement Commission, created in 1899. The NCC reports to Parliament via the minister responsible for the National Capital Act and has three essential roles: long-term plans for federal lands; principal steward of nationally significant public places; creative partner committed to excellence in development and conservation.
Think of this body as the urban planner for the National Capital Region, striving to enhance the natural and cultural character of the capital. Do they get anything done? The NCC has long been criticized for allowing the LeBreton Flats area to lie mostly dormant for decades. It finally opened the door to private development and the massive proposal it approved on this prime land implodes before it can get the first shovel in the ground. Back to the drawing board. The NCC employs more than 400 people and owns and manages more than 11 per cent of all lands in the capital region.
What’s the latest concerning the LeBreton project?
This week the NCC terminated the “preferred proponent term sheet” which was signed on Jan. 19, 2018, between the RendezVous LeBreton group and the NCC. Termination is effective within 30 days of this notice. In this way, short of a last-ditch miracle that brings RendezVous together again, the group’s bid will be dissolved by the time the NCC holds its next meeting in late January, and can begin picking up the pieces toward developing LeBreton Flats.
The NCC is expected to provide some future direction on LeBreton in late January or early February. There are numerous options open to the NCC board, including hitting the pause button on LeBreton to rethink the possibilities, starting the bidding process over, or entering into negotiations with the Devcore Canderel group, which bid against the RendezVous LeBreton group two years ago.
On. Feb. 4, Tobi Nussbaum, a former Ottawa city councillor, assumes the position of CEO of the NCC and is expected to make the LeBreton file a priority. Nussbaum, 48, is a bilingual lawyer with a degree in public administration from Harvard University. He has largely been a progressive voice on Ottawa council matters with a focus on community interests and public consultation. “This isn’t someone who would give carte blanche to the private sector,” wrote Ottawa Citizen city hall reporter Jon Willing.
Regardless of the next step, the NCC will not have to start the process entirely from scratch as there have been months of research into the task of removing contaminated soil on the site as well as talks with First Nations people as the Flats are on traditional Algonquin territory.
How and why did the RendezVous LeBreton group form?
From the outset, the partnership of Eugene Melnyk and the Senators with John Ruddy and Trinity Developments was a necessary evil; disparate businessmen forced to try to work together because there was really no alternative.
Trinity was invited to the table by then-Senators president Cyril Leeder because the company could undertake a massive project like LeBreton. Melnyk owns the arena and team, which were to form a significant component of the overall project. Melnyk has never been a fan of the Ottawa Sports and Entertainment Group (OSEG), which redeveloped Lansdowne Park and owns and operates the CFL Ottawa Redblacks, soccer Fury and OHL Ottawa 67’s. Ruddy is a founding member of OSEG and was a driving force in returning CFL football to Ottawa after a nine-year absence.
In contrast, Melnyk once tried to bring MLS soccer to Kanata and was rebuffed. In theory, Melnyk and his new partners in RendezVous were to set aside past differences and work together to deliver this project. They did get to the start line, largely from Leeder working with Trinity, winning approval from the NCC. In the early stages of the project, the understanding was that Melnyk would be responsible for the finance and design of the arena/entertainment complex. Trinity would take on the lion’s share of the rest of the project.
What was in the RendezVous LeBreton proposal?
In an agreement in principle made on Jan. 24, 2018, the NCC agreed to sell the land to the RendezVous LeBreton group for the purpose of creating a $4-billion-plus development, which would include an 18,000-seat arena for the Senators, a rink with a “green roof” and views of the Ottawa River and Parliament.
The project, first approved in April of 2016, also included an Abilities Centre promoting health, rehabilitation and recreation, a community square, two community rinks, an aqueduct, housing and retail. All of this within walking distance of a major light rail transit hub being developed as part of a broader city transportation plan. Construction was to start in 2017 or 2018, with an arena completed by 2020 or 2021. “We’re going to deliver everything we said we’d do,” Melnyk said on the day RendezVous was awarded the bid.
Where did the project stall?
In hindsight, the ongoing grumblings, pre-lawsuit, out of both camps made it clear it would be a cold day in hell before the two sides were ever going to be able to work together. Not when it was all but impossible to get the two protagonists in the same room. Yet, remarkably, the NCC seemed blissfully unaware of the degree of discourse when it announced on Nov. 23 that RendezVous LeBreton had two months to get its act together if it wanted to proceed with the project. A day later, Melnyk sued Ruddy.
Why is Melnyk suing Ruddy for $700 million?
Through his company, Capital Sports Management Inc. (CSMI), Melnyk claimed Ruddy had an “egregious conflict of interest” for planning to build, outside of the LeBreton deal but not far from the site, a high-rise tower complex of some 1,300 apartments, along with retail and office space at 900 Albert St. The CSMI statement of claim filed in late November also included RendezVous project manager Graham Bird and his company. Melnyk said the development at 900 Albert is in “direct competition” with the LeBreton project.
Why is Ruddy suing Melnyk for $1 billion?
Not surprisingly, the sound we heard this week was that of the other shoe dropping with a thud. Ruddy filed a counterclaim of $1 billion suggesting that 900 Albert is a “complementary” project and that Melnyk’s financial situation was such that he was trying to get free rent on a $500-million arena he hoped the city of Ottawa or Trinity could build. According to Ruddy, Melnyk wanted 30 years of free rent, rather than take on the arena construction.
In fact, on the same day the Ruddy counterclaim was filed, CSMI released a statement in which it offered to make the hockey team tenants in an arena built, owned and operated by Trinity. Ruddy’s response: “Our court filings today made clear that Mr. Melnyk and CSMI have been demanding a free arena courtesy of local taxpayers and Trinity … Mr. Melnyk’s letter does little more than confirm that fact.” According to Ruddy’s statement of defence, CSMI has been evading its financial responsibility as set out in the original agreement. None of the claims or counterclaims have been tested in court.
Can Cirque du Soleil save the day?
Possibly. Back in the spring of 2016, a rival bid to RendezVous was presented by a Quebec group, Devcore Canderel DLS, featuring Andre Desmarais of Power Corp, Guy Laliberte, co-founder of Cirque du Soleil, and Gatineau developer Jean-Pierre Poulin. At that time, the NCC opted for RendezVous’ less ambitious, more concise plan.
Though the NCC is not able to simply award the development to “Plan B,” Devcore could be invited to re-submit a bid, possibly fine-tuned from the rejected proposal that included a car museum and aquarium. Devcore suggests the NCC has a legal obligation to work with them, if RendezVous fails. The new Devcore plan may or may not involve an NHL rink. Poulin said this week Devcore would leave a “placeholder” for an NHL arena.
Will the NHL get involved?
With lawsuits flying and the LeBreton bid collapsing, NHL commissioner Gary Bettman has been reluctant to comment on the Ottawa situation, but clearly the league is keeping a close eye on developments here and would do what it can to facilitate a move to LeBreton Flats if it can. The league’s head office has often said the Senators belong closer to the city. Melnyk has flip-flopped back and forth on whether the Senators need to be downtown.
Will Ottawa ever have an NHL rink downtown?
The will is there to make it happen. Business and fan interests are focused on a more central location for Ottawa’s lone major-league sporting team. The NHL wants the Senators to get a new arena as the current venue is approaching 23 years old and constantly in need of repair and upgrades. In addition, the CTC is remote and automobile-dependant, more than 25 kilometres from the centre of the city and a good deal further for residents of Orleans and Ottawa South. A move to LeBreton is viewed by many in the region as a panacea, especially if it involves a change in ownership.
Under Melnyk, attendance has flagged in the past two seasons and there are concerns he does not have the financial wherewithal to run a competitive NHL operation. Whether a new rink means new ownership remains to be seen. Melnyk used to say he would never be a tenant in someone else’s building, but seems to have changed his tune, so moving into a Devcore-owned facility could be a possibility.
For those who remember the long odds against Ottawa being awarded an NHL franchise in 1990, moving downtown with an existing team seems eminently doable by comparison. From a hockey perspective, the risk of starting over with LeBreton is that it could open the door to a revised plan that doesn’t include a major arena.
What do the players think?
Senators defenceman Mark Borowiecki grew up in Kanata as a Senators fan, still lives near the team’s arena in Kanata, and drove down the street to join in the fun when Ottawa was hosting the 2008 draft and his name was called. He picked himself off the floor, stunned, after learning he’d been drafted by his hometown team, 139th overall.
“I’m not going to pretend I understand or have a grasp of (the failed LeBreton proposal), I can only speak as someone who grew up here, plays here now and likely will be living here in the future – I think a rink downtown is something the city needs eventually,” said Borowiecki.
“I’m not at the negotiating table, but as someone who has plans to stay here for a long time as a resident, it would be nice to be able to bring our kids downtown for a game. Hopefully things get worked out.
“I looked at those (plan) drawings and my first impression was — Wow! I need to log onto Realtor.ca and buy a house in Aylmer (across the Ottawa River). Let’s get realistic, I said I will probably be long gone from this league by the time that rolls around. Even more so, now (with the failed bid),” added the 29-year-old.
“Hopefully it’s something that can be revisited and figured out . . . you look around, Edmonton has a beautiful new rink downtown, Detroit just got one. I think it would be nice to be part of that, but it is beyond me.”
As always where the Senators are concerned, stay tuned for twists and developments.