Report to/Rapport au :


Corporate Services and Economic Development Committee

Comité des services organisationnels et du développement économique


and / et


Health, Recreation and Social Services Committee

Comité de la santé, des loisirs et des services sociaux


and Council / et au Conseil


 September 2003 / le  septembre 2003


Submitted by/Soumis par : Steve Kanellakos, Acting City Manager/

Intérimaire directeur général des services municipaux,

City Manager's Office/Bureau du directeur des services municipaux 

and / et

Jocelyne St Jean, General Manager/Directrice générale,

People Services/Services aux citoyens 


Contacts/Personnes ressource : Réjean Chartrand, Director

Strategic Delivery Unit/ Directeur, Unité d’exécution stratégique

(613) 580-2424 ext./ poste 21696,

and Colleen Hendrick, Director, Innovation, Development and Partnerships/ Directrice de l’Innovation, development et partenariat

(613) 724-4122 ext./ poste 24366,



Ref N°: ACS2003-CMR-OCM-0014













That the Corporate Services and Economic Development Committee and the Health, Recreation and Social Services Committee recommend Council:


1. Authorize the General Manager of People Services to finalize the negotiations and conclude and execute all necessary agreements with Ottawa Community Ice Partners (OCIP) for the provision of new ice surfaces at 1565 Maple Grove Rd. in accordance with the revised proposal submitted by OCIP as amended through negotiations, the terms and conditions in the Request for Proposal, and the framework contained in this report.


2. Designate 1565 Maple Grove Rd. as a Municipal Capital Facility as permitted under section 110 of the Municipal Act and Ontario Regulation 46/49 and that this designation be implemented by way of an Agreement between the City and OCIP, and by presenting to Council for enactment a by-law in accordance with the requirements of the Municipal Act and this report.


3. Declare that the Municipal Capital Facility at 1565 Maple Grove Rd. is for the purposes of the municipality and is for public use.





Que le Comité des services organisationnels et du développement économique et le Comité de la santé, des loisirs et des services sociaux recommandent au Conseil municipal de :


1. Autoriser le directeur général des Services aux citoyens à achever les négociations et à conclure et signer tous les accords jugés pertinents avec la Ottawa Community Ice Partners (OCIP) en vue de la création de nouvelles surfaces de glace au 1565 du chemin Maple Grove conformément à la proposition revisée soumise par l’OCIP et aux modifications qui y ont été apportées dans le cours des négociations, aux modalités et conditions énoncées dans la demande de propositions et au cadre de travail défini dans le présent rapport.


2. Désigner le 1565 du chemin Maple Grove à titre d’immobilisation municipale à usage public de la Ville en vertu de l’article 110 de la Loi sur les municipalités et le règlement 46/94 de l’Ontario, et veiller à ce que cette désignation soit établie, dans le cadre d’un accord entre la Ville et l’OCIP, et par l’intermédiaire d’un règlement soumis pour promulgation au Conseil municipal conformément aux dispositions de la Loi sur les municipalités et aux exigences énoncées dans le présent rapport.


3. Déclarer que le 1565 du chemin Maple Grove constitue une immobilisation municipale à usage public de la Ville.





In October 2002 City Council approved that a number of projects be implemented on a priority basis under public-private partnerships (P3s), including the provision of ice surfaces in the west district of the City.


A Request for Qualifications (RFQ) for Indoor Ice Surfaces was issued by the Supply Management Division on 18 November 2002 and was advertised on MERX.  The RFQ closed on 18 December 2002 and ten qualification submissions were received.


In February 2003, City Council approved three respondents for the west district to be on the short list to receive the Request for Proposal (RFP) in the next stage of the partnering process. The RFP was issued by the Supply Management Division and distributed directly to these three firms on 25 February 2003.  The RFP closed on 8 April 2003 and proposals were received from each of the short listed respondents.


In order to assess the proposals, an evaluation team was established including representatives from the People Services Department, RPAM, the Strategic Delivery Unit, and an external representative.  Based on established evaluation criteria, as detailed in the RFP, the evaluation team recommended that Ottawa Community Ice Partners (OCIP) be selected as the preferred respondent in the west district and that staff be authorized to initiate negotiations with OCIP to develop a partnership agreement for the provision of new ice surfaces.  This was approved by City Council on 11 June 2003.


The proposal advanced by OCIP was based on the conversion of a vacant building leased by Nortel at 500 Palladium Drive, and was therefore contingent on parallel successful negotiations with Nortel to make the property available to OCIP.  On July 25 Nortel announced that it had sold its leasehold interest in the property to an alternative party, removing that site as a potential site for the provision of new ice surfaces.


Because the sale of Nortel’s leasehold interest at 500 Palladium Drive substantially affected the original proposal from OCIP, and the proposals from the other two respondents were deemed not to meet the City’s technical and budgetary requirements, the City exercised the right to not proceed with the original RFP, but to issue a new RFP to the three pre-qualified respondents.  The pre-qualified respondents were each provided the opportunity to improve their proposals conditional on the revised proposal meeting all existing requirements of the original RFP.


Each of the three pre-qualified respondents were fully debriefed with regard to the shortcomings within their proposals through individual briefing sessions with staff, and were given two weeks to improve upon their original proposal.


All three of the pre-qualified respondents resubmitted revised proposals on 13 August 2003.  The evaluation team reconvened and, based on the original evaluation criteria detailed in the RFP, deemed the revised proposal from OCIP as best value to the City having achieved the highest score and most closely matching the City’s objectives.


This report forms the next step in the P3 process in that it outlines the negotiated framework for an agreement between the City and OCIP.  This report recommends the partnership agreement with OCIP be finalized and executed based on this framework.





The proposal submitted by OCIP is for the construction of a 4-Plex to include 4 ice surfaces, a multi-court field house, food and beverage concessions, and complementary retail space. The development will be located on a 10 acre site of undeveloped land at 1565 Maple Grove Rd., immediately across from Walter Baker Park.


The project will be owned and operated by a not for profit organization, OCIP, made up of four founding partners, namely, the Morley-Hoppner Group, the Ottawa Senators Hockey Club, CB Richard Ellis Ltd., and the Ottawa Senators Alumni.


Construction of the new facility is expected to cost in the order of $27M and will be built through private sector financing, with payments under the 30-year project lease to service the long-term debt financing to be guaranteed by the City under a Municipal Capital Facilities Agreement. OCIP will subcontract with the Ottawa Senators Hockey Club for the day-today operations and management of the facility for the 30 year duration of the Municipal Capital Facilities Agreement.  At the end of the term, the facility will be purchased by the City for one dollar.


OCIP will be responsible for all of the programming and marketing of its activities.


Financial Framework:


The City and OCIP will enter into a Municipal Capital Facilities Agreement to provide a guarantee for the project lease, and to waive the payment of property taxes for the duration of the agreement.


The City’s rate for the purchase of 2400 hours of prime ice time will be $143/hr, to be escalated at 1.75% annually for the first five years of the partnering agreement. Escalation rates will be reviewed and renegotiated every five years. This rate of $143/hr compares very favourably to the City’s public sector comparator of $250/hr and represents an implied annual savings to the City of approximately $257K.


In order to mitigate the risk to the City of providing a guarantee of the project lease, OCIP will establish an Operating Reserve and a Lifecycle Renewal Reserve. The Operating Reserve will be funded over time to a level sufficient to meet the obligations under the project lease for one full year. Initially, the targeted balance in the Operating Reserve will be approximately $1.6M, increasing over time in step with the increasing lease obligations.


This initial reserve balance will be funded as follows:

·      $800K contribution by OCIP

·      $250K annual contribution by the City; this represents the difference between the city’s public sector comparator hourly cost ($250/hr) and the purchase cost from OCIP ($143/hr) for the 2400 hours of ice time being purchased

·      50% of the annual net cash flow after all expenses and lease obligations


Based on the business pro-forma submitted, it is anticipated that the annual contribution from the City would only be required in the first four years of the partnering agreement. After that point in time, the annual contribution from operations is sufficient to sustain the Operating Reserve to the agreed upon level.


Funds will be released from the Operating Reserve in the following order of priority:


The Lifecycle Renewal Reserve will be established by OCIP to ensure that all lifecycle renewal requirements over the 30-year lease period are fully funded. This will not only benefit OCIP and the users of the facility during the initial 30 year term, but it will result in the City taking ownership of a properly maintained, fully functional facility at the end of the 30 years. Any funds remaining in this reserve at the end of the term will transfer to the City with the facility.


The Lifecycle Renewal Reserve will be funded through contributions of 50% of annual net cash flow after all expenses and lease obligations. In addition, any surplus from the Operating Reserve will be transferred to the Lifecycle Renewal Reserve.


OCIP will provide audited financial statements annually to ensure the flow of funds respects the terms of the agreement.


Risk Distribution:


This public-private partnership requires the private sector partner to assume all risks related to the design and construction of the new facility and to assume part of the performance and revenue risk related to the management and operation of the new facility. The operator will be paid a base management fee of $135K per year, which could escalate to $350K based on performance, if all conditions of the project lease are met and the capital reserves are kept current. Any shortfall in meeting these financial commitments will result in the payment of the base management fee only.


In addition, as detailed above, OCIP will contribute $800K at the start of the lease period to the Operating Reserve, and this fund is first at risk should there be any default in meeting OCIP’s financial commitments.


The City will guarantee the project lease through a Municipal Capital Facilities Agreement and will also waive the payment of applicable property taxes through the same agreement. The City’s guarantee is tied with the start of operations of the new facility and results in the City becoming liable for any shortfall in the project lease payments. This risk is mitigated through the Operating Reserve, the strength of the demand for the programming and services to be offered in the facility, the business case submitted, and the experience and competence of the operator of the facility.


The location of this new facility immediately across from Walter Baker Park also reinforces the business case for the project. Walter Baker Park houses 5 baseball diamonds, 6 soccer fields, 1 toboggan hill and 1 skate park and the synergy between these current uses and the new 4-Plex will be positive.  It should be noted that the twin pad Kanata Recreation Centre, located in near proximity, is not anticipated to be negatively affected by the addition to the inventory, as the demand for ice far outweighs the present supply.


The creation of a Lifecycle Renewal Reserve also mitigates any risk to the City and will ensure the timely completion of lifecycle renewal work. As additional guarantee, the facility reverts to the City for one dollar at the end of the 30-year agreement.


P3 Benefits to the Community:


This new 4-Plex, including an indoor soccer field, will go a long ways towards meeting the demand for additional ice time in the west district of the City and will also add to the supply of indoor soccer fields.


The implementation of this public-private partnership also advances the delivery of this much needed infrastructure and provides more than twice the playing surfaces that the City would have considered under its traditional approach to service delivery.


Finally, the construction of a modern recreational facility will result in much increased programming and services being offered and delivered to the community and will be a source of pride for the community.





There are no environmental implications related to this project. Standard development conditions will apply.





The facility will be available to users from across the City, including rural residents who will have access to the new facility.





In developing their proposal, OCIP carried out extensive consultation and discussion with user groups in the west district and all have indicated strong support for this new facility. A formal public meeting on this public-private partnership will be held on 15 September 2003 and feedback on comments received will be presented verbally at the Committee meeting.





The construction of this new facility is expected to cost $27M and will be designed, built, financed, and operated by the private sector. The City will guarantee the project lease through a Municipal Capital Facilities Agreement.


The purchase of 2400 hours of ice time at $143/hr by the City will result in a new and expanded program at the City and will place an additional annual pressure of $343,200 on operating budgets. This will be offset through the sale of this ice time to local organizations, anticipated to generate a revenue of approximately $228,000, leaving an annual net new and expanded cost to the City of $115,200.


The City’s annual contribution of $250K into an Operating Reserve, anticipated for the first four years of the agreement, will also increase the pressure on operating budgets. 


The approval of this partnership agreement will result in a long-term commitment to this new and expanded program in the west district of the City, and base operating budgets will need to be adjusted accordingly starting in 2004.





No supporting documentation attached.





The Strategic Delivery Unit and the People Services Department, in consultation with the Legal Services Branch, will finalize and arrange for the execution of the necessary agreements to implement this public-private partnership with OCIP. Implementation of the project will proceed immediately after agreements are executed, with an anticipated completion date of Fall 2004.