Public Values

Friends of Lansdowne launches court appeal to stop P3 plan

Judge interpreted the law too broadly, says citizen coalition.

Lansdowne Park in the heart of Ottawa is bounded by the Rideau Canal, a UNESCO World Heritage Site.by Ken Shipley, FOL

A TOP PUBLICVALUES.CA STORY FROM 2011 — OTTAWA, ON, September 26, 2011: In late 2010, Friends of Lansdowne (FOL), a grassroots coalition of citizens from all parts of Ottawa, launched a legal challenge against the City of Ottawa asking that the Lansdowne Partnership Plan be stopped. On July 28, 2011, Mr. Justice C. T. Hackland of the Superior Court of Ontario ruled against Friends of Lansdowne's legal action. Friends of Lansdowne is appealing the decision.

The legal challenge asks that the city's plan for redevelopment of Lansdowne Park be set aside. The redevelopment plans for Lansdowne amount to a giveaway of public land to make way for an unimaginative development of residential condos, a grocery store, a cinema complex, a liquor store, office space in tall buildings, restaurants and bars, and a refurbished sports stadium. Sylvia Holden Park, a small park adjacent to the north boundary of Lansdowne Park, is to be lost as part of the redevelopment plan.

Background

Lansdowne Park is a 37.5-acre site located in heart of the City of Ottawa. It is one of the most important pieces of public property in the city. It is bounded on the south and east by the Rideau Canal, a UNESCO World Heritage Site, and on the north and west by the Ottawa neighbourhood known as the Glebe. Lansdowne Park is home to Frank Clair Stadium, the Civic Centre Arena, the Coliseum Building, the Aberdeen Pavilion, the Horticulture Building, and the Eddie Friel Building. The Ottawa Agriculture Society purchased the parcels that make up the present site in 1868 and 1874, and it held its first agricultural show there in 1869. Lansdowne Park has played a central role in the history of the City ever since. In recent decades, however, Lansdowne has been neglected, underutilized, and the buildings allowed to deteriorate. Redevelopment is long overdue.

  "If Justice Hackland's decision is allowed to stand, municipal governments across Canada will be free to consider developments that contravene their own bylaws."

Over the past 10 or so years, the city held several consultations with the public about what should be done with Lansdowne. This led, in early 2008, to an international design competition in which the City proposed to invite designers from around the world to come forward with ideas for developing the site. After years of neglect, Lansdowne Park was at last getting the attention it deserved. Public consultations were held regarding the design brief required to launch the competition, but then the initiative stalled. It turned out that City staff and then-Mayor Larry O'Brien were talking with the developers' group now known as OSEG (Ottawa Sports and Entertainment Group) about development of the entire 37.5-acre site. The design competition was suspended and then dropped.

The legal challenge

There was much community opposition to the city's decision to drop the international design competition in favour of a sole-sourced deal. The public came out to marches, rallies, and protests. Hundreds attended city council meetings where many spoke against the emerging LPP (Lansdowne Partnership Plan). Representations were made to council members, both individually and as a group. Finally, in early 2009, a group of citizens formed Friends of Lansdowne, with membership from across the city of Ottawa. FOL began organizing more citizen protests about the city's plans for Lansdowne. Finally, when it became clear that this kind of citizen action was getting nowhere, FOL resorted to legal action.

FOL's lawyers called for the quashing of By-law 2010-225, which provides the framework for the LPP, arguing that the City's actions in the following three main areas were in contravention of the Ontario Municipal Act:

a) That the City failed to act in good faith;
b) That the City violated its own procurement by-laws;
c) That the City illegally bonused OSEG.

On the good faith question, the Municipal Act requires a high standard of candour, frankness, impartiality, and fairness by municipal governments. Municipalities must also exercise due diligence in their public duties. Our lawyers argued that the City of Ottawa relied on misleading or inaccurate materials, failed to keep proper business records, and failed to exercise due diligence with respect to determining value for money. As well, FOL argued that the city behaved in an arbitrary or unfair manner when it failed to adequately consult or give due regard to important heritage conservation principles.

As an example of bad faith, in 2009 the City commissioned the accounting firm Deloitte to examine the LPP deal. Deloitte issued a report critical of the proposed agreement, which was never made public, or distributed or released to Council.

Justice Hackland held that, for the by-law to be set aside on the basis of bad faith, it must be shown that a majority of the members of Council acted in bad faith. He did not accept that the totality of actions by the City, in which important information was kept from both Council and the public, was sufficient to support the bad faith argument.

With procurement, our lawyers referred to a foundational requirement of public law requiring governments and other public bodies to act with a high degree of integrity, transparency, and fairness when undertaking public procurement. Open, fair, and competitive processes are the essential means by which these objectives are to be achieved. FOL lawyers argued that the City acted illegally in proceeding with a sole-source procurement for redevelopment of Lansdowne Park by accepting a proposal from OSEG to redevelop the Park while a competitive procurement process was underway, thus not complying with the City's own Purchasing By-law.

Justice Hackland accepted the City's contention that OSEG was the only possible bidder who could come with a conditional CFL (Canadian Football League) franchise, plus an OHL (Ontario Hockey League) team already owned by one of the OSEG principals.

Regarding bonusing, the Municipal Act, in general, prevents a municipality from assisting any commercial enterprise through the granting of bonuses. The prohibition explicitly prohibits the giving or lending of property, including leasing of property at below fair market value.

FOL lawyers argued that the City is proposing to assist OSEG by providing leases at below market value, by providing financial assistance to acquire and operate the CFL and OHL franchises, and by providing preferential terms with respect to OSEG's return on its equity under the financial plan.

For example, the leasing of city property under the LPP for a nominal rent represents assistance to OSEG, a commercial enterprise, which is clearly in violation of the prohibition set out in the Act. Under the LPP, the City proposes to lease facilities and land owned by the City to OSEG for a period of 30 years for a nominal rent of $1.00 per year. Justice Hackland ruled that this was part of the larger deal which must be considered as a whole.

Stripped of its complexity, FOL lawyers argued that the LPP may be seen predominantly as a scheme for conferring a number of obvious advantages on OSEG for the purposes of reimbursing it for the costs of acquiring and operating CFL and OHL franchises, and underwriting the risks of those franchises losing money. Justice Hackland held that municipal governments should be given considerable latitude in their dealings with the private sector.

The appeal

FOL lawyers believe that Justice Hackland interpreted the Ontario Municipal Act more broadly than is justified, and that an appeal to the Ontario Court of Appeal Supreme Court is therefore warranted. The hearing before the Ontario Supreme Court is expected to take place before the end of 2011.

Litigation chill

The importance of this appeal goes beyond the City's plans for Lansdowne. If Justice Hackland's decision is allowed to stand, municipal governments across Canada will be free to consider developments that contravene their own bylaws. When this is combined with the recent move by Ottawa City Council to rescind its policy of not seeking costs from citizen's groups who bring reasonable (though ultimately unsuccessful) legal proceedings against the City and lose, it will become prohibitive for citizens to hold their municipal governments to account.

Other issues

In the meantime, there are other impediments to implementation of the LPP. The project has not received necessary heritage, environmental, and site plan approvals. These will take many months and may require significant changes to the current plan. City Council's final approval of the project is not expected to take place until early 2012. In addition, Council has not considered the major financial discrepancies that were revealed while preparing for the Superior Court hearing that may mean that taxpayers will have to spend tens of millions more on the project than previously anticipated.

The Lansdowne Park drama can be expected to capture our attention for months to come.

Ken Shipley is a retired professional fundraiser and a member of Friends of Lansdowne.

Posted: September 29, 2011

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