18. CITY OF OTTAWA SUPPORT FOR OTTAWA
CONGRESS CENTRE REDEVELOPMENT PROJECT

APPUI DE LA VILLE D'OTTAWA POUR LE PROJET DE
RÉAMÉNAGEMENT DU CENTRE DES CONGRÈS D'OTTAWA

Committee Recommendations as amended

That Council:

1. Support the Ottawa Congress Centre (OCC) planned reconstruction and expansion as a Strategic Priority Initiative and reconfirm City Council’s commitment as per Motion No. 57/4 (Document 1) to provide $25 million for the capital construction costs to be financed by a debenture in that amount;

2. Contribute an additional $15 million as a Strategic Priority Initiative for the OCC’s planned reconstruction and expansion and authorize debt financing in the same amount, subject to Council’s deliberations of the 2008 budget;

3. Withdraw its total funding contribution of $40 million to the OCC project if the City has not received written confirmation that all project funding is secured and a conditional building permit has been released for the project by December 31^st 2008; and

4. Delegate responsibility to the City Manager to negotiate, approve and execute a contribution funding agreement with the OCC upon satisfactory completion of conditions that include but are not limited to the following:

a. The City receiving from the Government of Ontario its assurance, in a form satisfactory to the City, that the Province is the sole owner of the OCC and assumes the continuing full and final financial responsibility for the OCC, as it is currently constituted or any permitted successor thereof.

b. The City receiving written confirmation from the Government of Ontario that it has issued to the OCC $30 million for the reconstruction of the Ottawa Congress Centre in keeping with its previous funding commitment.

c. The City receiving a copy of the fully executed funding agreement between the OCC and the Government of Ontario detailing and committing its additional $20 million contribution to the project.

d. The City receiving a copy of the fully executed funding agreement between the OCC and the Federal Government detailing and committing its $50 million contribution to the project.

e. The City receiving written confirmation from the OCC that sufficient debt financing from their lenders of no less than $30 million to an upset of $40 million, over and above the Municipal, Provincial and Federal Government project funding requested herein, has been unconditionally committed and will be secured by the Government of Ontario for the Ottawa Congress Centre project.

f. The City receiving executed legal agreements between the OCC and organizations such as the Ottawa Airport Authority (OAA) and the Ottawa Gatineau Hotel Association (OGHA) that specifies a combined annual payment with a minimum term of 25 years of $1.5 million that is to be indexed for inflation to ensure the financial sustainability for the OCC operations.

g. The City receiving written assurances from the Government of Ontario together with any necessary approvals by the Minister of Finance in a form satisfactory to the City, that it assumes ultimate ownership of the OCC and that any operational shortfalls and/or debt under the current OCC governance model or under any future governance model of the OCC will be appropriately addressed by the OCC and the Government of Ontario, and not by the City.

h. That a new building design and road design concept for Colonel By Drive be developed by the OCC for review and written approval by both the National Capital Commission (NCC) and the City of Ottawa.

i. That the OCC design meets the requirements of the “Downtown Ottawa Urban Design Strategy”.

j. The City receiving and being satisfied with the terms of the final executed amended and restated lease between the OCC and the Viking Rideau Corporation (VRC) and with the final executed development and Construction Agreement between the same parties, and receiving non-disturbance agreements from all of VRC’s current mortgagees.

k. The City receiving written assurances from the OCC and Province, that they shall not change the use of the facility, or assign or transfer charge or mortgagee, the leasehold interest in all or part of the new facility for the duration of the lease with the VRC, without prior written consent of the City.

l. The OCC demonstrating to the satisfaction of the City that it will use reasonable commercial efforts to achieve LEED (Leadership in Energy and Environmental Design) Silver certification for the Ottawa Congress Centre Building and that Green Roof technology be incorporated where possible.

m. The OCC agreeing to direct 1.5% of the final construction budget (currently estimated at $159 million) for the OCC project towards implementing the City’s Transit Oriented Development Guidelines. Such funding will be used to integrate the downtown transit network, into the Congress Centre project and improve transit services to and from the building.

n. The OCC agree that the release of the City’s funding of $40 million for the project be conditional on all required approvals and/or permits under the Planning Act and Building Code Act for the projects development have been obtained including any required approvals from the Provincial and Federal Governments.

o. The City receiving from the OCC its written confirmation that it shall use a competitive process, as pre-approved by the City, to acquire all equipment, services, supplies and for construction.

5. Approve that the Ottawa Congress Centre be requested to work with the City of Ottawa to identify potential sources of revenue from the Centre that would repay the $40 million dollar investment by the City for the capital construction of the Centre – such sources of revenue could include:

a) a portion of any revenues over expenses of the Centre;

b) having the Province provide grants in lieu of taxes for the Centre until the grant is repaid, including any interest costs incurred by the City;

c) negotiating a share of G.S.T. and/or P.S.T. paid for services at the Centre until the grant is repaid;

d) other possibilities; and

6. Approve that the Corporate Services and Economic Development Committee receive a report on progress made on these initiatives on at least an annual basis.

Recommandations modifiées du comité

Que le Conseil :

1. appuie la reconstruction et l’expansion prévues du Centre des congrès d’Ottawa (CCO) à titre d’initiative prioritaire stratégique et de reconfirmer l’engagement qu’a pris le Conseil municipal conformément à la motion n^o 57/4 (Document 1) de fournir 25 millions de dollars pour les coûts de construction d’immobilisations qui seront financés par une débenture de ce montant;

2. fournisse 15 millions de dollars supplémentaires à titre d’initiative prioritaire stratégique aux fins de la reconstruction et de l’expansion prévues du CCO, et d’autoriser le financement par emprunt de ce même montant, selon les délibérations du Conseil sur le budget 2008;

3. retire la totalité de sa contribution au financement de 40 millions de dollars du projet du CCO si la Ville n’a pas reçu de confirmation par écrit que l’ensemble du financement du projet est garanti et qu’un permis de construction conditionnel sera délivré aux fins du projet d’ici le 31 décembre 2008; et

4. confisse au directeur municipal la responsabilité de négocier, d’approuver et de signer un accord de financement sous forme de contribution avec le CCO, y compris les conditions préalables suivantes, qui doivent être abordées avant la signature de l’accord de contribution, sur des questions qui incluent mais qui ne se limitent pas à ce qui suit :

a. La Ville qui reçoit du gouvernement de l’Ontario l’assurance, sous une forme satisfaisante pour la Ville, que la province est le seul propriétaire du CCO et qu’elle assume de façon permanente la responsabilité financière complète et finale du CCO comme il est constitué présentement, ou tout successeur permis correspondant;

b. La Ville reçoive du gouvernement de l’Ontario une confirmation par écrit indiquant qu’il a accordé au CCO 30 millions de dollars pour la reconstruction du Centre des congrès d’Ottawa, conformément à son engagement en matière de financement précédent;

c. La Ville qui reçoit une copie de l’accord de financement dûment signé entre le CCO et le gouvernement de l’Ontario présentant les détails de son montant supplémentaire de 20 millions de dollars qui a été engagé dans le projet;

d. La Ville qui reçoit une copie de l’accord de financement dûment signé entre le CCO et le gouvernement fédéral présentant les détails de son montant de 50 millions de dollars qui a été engagé dans le projet;

e. La Ville qui reçoit une confirmation par écrit du CCO indiquant qu’un financement par emprunt suffisant de leurs prêteurs d’au moins 30 millions de dollars et d’au plus 40 millions de dollars, en sus des subventions publiques, a été engagé sans condition et sera garanti par le gouvernement de l’Ontario pour les coûts de construction d’immobilisations du nouveau Centre des congrès d’Ottawa;

f. La Ville qui reçoit les accords juridiques signés entre le CCO et des organismes tels que l’Administration de l’Aéroport d’Ottawa et l’Association des hôtels d’Ottawa-Gatineau qui précisent un paiement annuel combiné, dont le terme minimal est de 25 ans, de 1,5 million de dollars qui sera indexé à l’inflation, en vue d’aider à maintenir la viabilité financière à long terme des activités du CCO;

g. La Ville qui reçoit du gouvernement de l’Ontario l’assurance par écrit, ainsi que toute autorisation nécessaire du ministre des Finances sous une forme satisfaisante pour la Ville, qu’il assume la propriété ultime et que toute lacune opérationnelle et/ou toute dette en vertu du modèle de gouvernance actuel du CCO ou en vertu de tout modèle de gouvernance futur du CCO sera adéquatement gérée par le CCO et le gouvernement de l’Ontario, et non par la Ville;

h. Qu’un nouveau concept d’aménagement de bâtiment et de la route pour la promenade Colonel‑By soit élaboré pour fins d’examen et d’approbation par écrit par la Commission de la capitale nationale (CCN) et la Ville d’Ottawa;

i. Que le plan d’aménagement du CCO réponde aux exigences de la « Stratégie de conception urbaine du centre-ville d’Ottawa »;

j. La Ville qui reçoit les modalités du bail final modifié et reformulé qui a été signé entre le CCO et la Société Viking de Rideau, et qui en est satisfaite, ainsi que de l’accord d’aménagement et de construction final dûment signé entre les mêmes parties, et qui reçoit des accords anti-nuisance de tous les créanciers actuels de la Société Viking de Rideau;

k. La Ville qui reçoit du CCO et de la province l’assurance par écrit qu’ils ne doivent pas changer l’utilisation de l’installation, ni céder ni transférer au responsable ou au créancier, les intérêts à bail, en tout ou en partie, de la nouvelle installation, pour la durée du bail signé par la Société Viking de Rideau, sans consentement écrit préalable de la Ville;

l. Le CCO qui démontre à la satisfaction de la Ville qu’il fera preuve d’efforts commerciaux raisonnables pour satisfaire aux critères d’homologation de catégorie argent de LEED (leadership en matière d’énergie et d’environnement) pour le bâtiment du Centre des congrès d’Ottawa et que la technologie du toit vert sera utilisée dans la mesure du possible;

m. Le CCO qui accepte de consacrer 1,5 % de son financement total nécessaire au chapitre des immobilisations (159 millions de dollars) à la mise en œuvre des lignes directrices sur l’aménagement axées sur le transport en commun de la Ville. Ces fonds serviront à intégrer le réseau des transports en commun du centre-ville, qui est actuellement traité dans le cadre du projet du Centre des congrès, et à améliorer les services de transport en commun à partir de l’édifice et vers l’édifice;

n. Le CCO accepte que la libération des fonds de la Ville d’un montant de 40 millions de dollars pour le projet soit conditionnelle à l’obtention des approbations et de tous les permis requis en vertu de la Loi sur l’aménagement du territoire et de la Loi sur le code du bâtiment pour l’aménagement des projets, ainsi que toute approbation des gouvernements fédéral et provincial requise.

o. La Ville qui reçoit du CCO la confirmation par écrit qu’il adoptera un processus concurrentiel, ayant été approuvé d’avance par la Ville en vue d’acquérir l’ensemble du matériel, des services et des ressources nécessaires à la construction.

5. approuve que l’on demande au Centre des congrès d’Ottawa de collaborer avec la Ville d’Ottawa afin de déterminer les sources de revenus possibles du Centre qui permettraient de rembourser les 40 millions de dollars investis par la Ville pour la construction du Centre. De telles sources de revenus pourraient inclure ce qui suit :

a) une partie de tout revenu excédant les dépenses du Centre;

b) demander à la province d’offrir des subventions tenant lieu de taxes pour le Centre jusqu’à ce que la subvention soit remboursée, y compris tous les coûts d’intérêts engagés par la Ville;

c) négocier qu’une part de la TPS et/ou TVP soit payée pour les services au Centre jusqu’à ce que la subvention soit remboursée;

d) d’autres possibilités.

6. approuve que le Comité des services organisationnels et du développement économique reçoive un rapport sur les progrès réalisés à l’égard de ces initiatives au moins une fois par année.

DOCUMENTATION

1. Deputy City Manager's report (Planning, Transit and the Environment) dated
14 November 2007 (ACS2007-PTE-ECO-0023).

2. Extract of Draft Minute, 19 November 2007.

Report to/Rapport au :

Corporate Services and Economic Development Committee

Comité des services organisationnels et du développement économique

and Council / et au Conseil

14 November 2007 / le 14 novembre 2007

Submitted by/Soumis par : Nancy Schepers

Deputy City Manager/Directrice municipale adjointe

Planning, transit and the Environment/Urbanisme, Transport en commun et Environement

Contact Person/Personne ressource : Rob Mackay, Acting Director, Economic and Environmental Sustainability Branch

Economic Development and Strategic Projects/
Développement économique et Projets stratégiques

(613) 580-2424 x, 22632 Rob.Mackay@ottawa.ca

City Wide / À l'échelle de la ville

Ref N°: ACS2007-PTE-ECO-0023

SUBJECT:	City of ottawa support for ottawa congress centre redevelopment project

OBJET :	appui de la ville d’ottawa pour le projet dE RÉaménagement du centre des congrès d’ottawa

REPORT RECOMMENDATIONS

That the Corporate Services and Economic Development Committee recommend Council:

c. The City receiving a copy of the fully executed funding agreement between the OCC and the Government of Ontario detailing and committing its additional $20 million contribution to the project.

d. The City receiving a copy of the fully executed funding agreement between the OCC and the Federal Government detailing and committing its $50 million contribution to the project.

h. That a new building design and road design concept for Colonel By Drive be developed by the OCC for review and written approval by both the National Capital Commission (NCC) and the City of Ottawa.

i. That the OCC design meets the requirements of the “Downtown Ottawa Urban Design Strategy”.

o. The City receiving from the OCC its written confirmation that it shall use a competitive process, as pre-approved by the City, to acquire all equipment, services, supplies and for construction.

RECOMMANDATIONS DU RAPPORT

Que le Comité des services organisationnels et du développement économique recommande au Conseil :

1. d’appuyer la reconstruction et l’expansion prévues du Centre des congrès d’Ottawa (CCO) à titre d’initiative prioritaire stratégique et de reconfirmer l’engagement qu’a pris le Conseil municipal conformément à la motion n^o 57/4 (Document 1) de fournir 25 millions de dollars pour les coûts de construction d’immobilisations qui seront financés par une débenture de ce montant;

2. de fournir 15 millions de dollars supplémentaires à titre d’initiative prioritaire stratégique aux fins de la reconstruction et de l’expansion prévues du CCO, et d’autoriser le financement par emprunt de ce même montant, selon les délibérations du Conseil sur le budget 2008;

3. de retirer la totalité de sa contribution au financement de 40 millions de dollars du projet du CCO si la Ville n’a pas reçu de confirmation par écrit que l’ensemble du financement du projet est garanti et qu’un permis de construction conditionnel sera délivré aux fins du projet d’ici le 31 décembre 2008; et

4. de confier au directeur municipal la responsabilité de négocier, d’approuver et de signer un accord de financement sous forme de contribution avec le CCO, y compris les conditions préalables suivantes, qui doivent être abordées avant la signature de l’accord de contribution, sur des questions qui incluent mais qui ne se limitent pas à ce qui suit :

i. Que le plan d’aménagement du CCO réponde aux exigences de la « Stratégie de conception urbaine du centre-ville d’Ottawa »;

EXECUTIVE SUMMARY

Assumptions and Analysis

An expanded Ottawa Congress Centre (OCC) will allow Ottawa to effectively compete for world-class conventions, meet Ottawa’s needs as a G8 Capital and renew and revitalize the heart the City’s downtown. Over the past decade, several attempts to expand the OCC have been made. The existing facility’s small size of 70,000 square feet of leasable space and deteriorating condition has constrained and limited economic growth and the local tourism industry in the City. On September 2007, under the leadership of a new Chair and President, as well as Board of Directors, the OCC released its redevelopment and business plans for review.

The redevelopment proposal calls for a Tier II convention facility (ranking assigned by event planners based on the City’s population and air access and the size and quality of its primary convention facility). This involves the demolition of the existing facility to be replaced by a vertical and horizontal expansion of two new floors from ground level with over 200,000 square feet of rentable convention and meeting space. The new space will be extended outward to Colonel By Drive and Daly Avenue.

A financial model has been developed for the new facility identifying a total upset project cost of $180 million. This includes construction costs of $159 million and the balance for transition costs, OCC operating losses during the construction period, etc. The financial model requires $140 million in public funding with the balance of costs, estimated between $30 to $40 million as an upset amount, to be financed by the OCC. The public sector contributions are detailed as follows: Federal Government $50 million; Provincial Government 50 million and the City of Ottawa $40 million.

The OCC intends to cease operations and commence demolition by September 1, 2008 for a duration of 6 months. Construction is planned over a 24-26 month period with the facility opening on April 1, 2011 after commissioning.

Substantial short and long term economic benefits will be realized including 1500 jobs directly and 4500 jobs indirectly related to the expansion. The City’s investment in a new OCC will positively impact the City’s hotel, retail, restaurant, transportation and entertainment sectors resulting in a conservative, anticipated increase in property tax revenues from the growth of these industries by $19.5 million per year. This investment will leverage $140 million of capital spending on the project from the OCC, Provincial and Federal Governments. Through this spending a major world-class public facility will be developed in Ottawa’s downtown precinct, which will serve as a catalyst for further positive change and revitalization of this important area of the City. This revitalization is inline with the City’s recently completed Downtown Urban Strategy and will accelerate the achievement of key objectives in this document. A Tier II convention centre in Ottawa will assist the City’s global market efforts attracting new investment and skilled workers. As well it is anticipated that the City will now capture a larger percentage of government conventions, which could not be accommodated in the smaller, existing convention centre. It will also stem the flow of other non-government convention centre and meeting room business out of Ottawa and recapture this investment in the City and its economy.

Financial Implications:

On June 25^th 2003 Council approved motion No. 57/4 to provide a contribution of $25 million to the OCC expansion project. The motion also removed previous conditions associated with this project with the exception that written confirmation be received from the Government of Ontario indicating they are sole owner of the OCC. In accordance with this motion, $25 million of debt authority has been established and an account (903640) has been set-up for cash flow purposes.

An additional debt authority for $15 million is required in accordance with the current funding contribution request made by the OCC and its approval will be subject to the outcome of the 2008 budget exercise. Should this funding be approved this amount will be placed in the City’s Strategic Initiatives Fund. This fund is established for Council-directed initiatives identified in the City Corporate Plan and for projects that implement City master plans and the Ottawa 20/20 Plans.

The estimated costs of payments on a $40 million debenture issued by the City at current rates over 25 years would be about $2.9 million.

As well staff have recommended that 1.5 percent of the total capital funding requirements be used towards implementing the City’s transit oriented guidelines, as per recommendation 4(m) of this report, as a means of offsetting these costs and to assist in meeting transit objectives. The City’s Funding Contribution Agreement with the OCC will specify how this money is to be directed towards transit related infrastructure.

Property taxes will not be paid on the expanded OCC building. Under Section 10.1 of the Ottawa Congress Centre Act, 1988, the crown agency is directly exempt from municipal property taxes as long as the facility is used as a convention centre.

Public Consultation/Input

The City’s Economic Strategy, Official Plan and the City’s Corporate Plan that support Ottawa’s status as an international convention and tourism destination, were developed in consultation with the community. As well, the OCC has also undergone extensive consultation with the tourism industry, meeting planners and stakeholders as part of the OCC Redevelopment Feasibility Study initiated earlier this year and completed in September 2007.

A comprehensive communications plan has been developed for the OCC with a set of action plans. The Plan was prepared by GBA communication consultants who have identified key audiences and a communications framework. The communications framework is designed to step up communications as the project rolls out from conception to completion. The OCC is currently undergoing an eight-week campaign with a series of full-page weekly ads in the Ottawa Citizen to communicate the redevelopment proposal to the public.

The Ottawa Chamber of Commerce, the downtown Business Improvement Area Associations, Ottawa Tourism the Ottawa Airport Authority and the Ottawa Gatineau Hotel Association have endorsed the redevelopment proposal.

RÉSUMÉ

Une expansion du Centre des congrès d’Ottawa (CCO) permettra à Ottawa de concurrencer efficacement sur le plan des congrès de classe internationale, répondra aux besoins d’Ottawa à titre de capitale du G8 et renouvellera et revitalisera le cœur du centre-ville. Au cours des dix dernières années, il y a eu plusieurs tentatives d’expansion du CCO. La petite taille de l’établissement actuel (70 000 pieds carrés d’espace louable) et sa condition en détérioration ont freiné et limité la croissance économique ainsi que l’industrie locale du tourisme dans la Ville. En septembre 2007, sous le leadership d’un nouveau président et du Conseil d’administration, le CCO a diffusé ses plans d’activités et de réaménagement pour fins d’examen.

La proposition de réaménagement concerne un centre de congrès de deuxième catégorie (le classement est attribué par les organisateurs de l’événement selon la population de la Ville et l’accès par voie aérienne et selon la taille et la qualité de son centre de congrès principal). Ce réaménagement comprend la démolition de l’établissement actuel, qui sera remplacé par une expansion verticale et horizontale de deux nouveaux étages à partir du niveau du sol comptant plus de 200 000 pieds carrés qui peuvent être loués pour des réunions et des congrès. Les nouveaux locaux seront agrandis vers l’extérieur vers la promenade du Colonel‑By et l’avenue Daly.

Dans le modèle financier qui a été élaboré pour le nouvel établissement, on a attribué 159 millions de dollars pour payer le total des coûts de construction d’immobilisations et d’aménagement et un total de 170‑180 millions de dollars pour payer tous les autres coûts associés au réaménagement, y compris les coûts des RH et les pertes d’exploitation pendant la période de construction. Le modèle financier exige que les 140 millions de dollars de fonds publics et la balance des coûts, évaluée à 30‑40 millions de dollars, soient financés par le CCO. Les contributions du secteur public sont réparties comme suit : gouvernement fédéral – 50 millions de dollars; gouvernement provincial – 50 millions de dollars et la Ville d’Ottawa – 40 millions de dollars.

Le CCO prévoit cesser ses activités et commencer la démolition au plus tard le 1^er septembre 2008 pour une durée de six mois. On prévoit que la construction durera entre 24 et 26 mois et que l’établissement pourra recommencer ses activités le 1^er avril 2011.

Il y aura des retombées économiques considérables à court terme et à long terme, y compris 1 500 emplois directement liés à l’expansion et 4 500 emplois indirectement liés à cette expansion. L’investissement de la Ville dans l’expansion du CCO aura également des répercussions positives pour les secteurs hôtelier, du commerce de détail, de la restauration, du transport et du divertissement de la Ville entraînant une augmentation prévue des recettes tirées des taxes foncières de ces industries de 19,5 millions par année. De plus, l’investissement de la Ville procurera 140 millions de dollars supplémentaires pour construire un important établissement public de classe mondiale dans un secteur clé du centre-ville qui jouera un rôle catalyseur dans l’apport d’autres changements positifs visant à revitaliser le milieu urbain environnant et à stimuler l’aménagement de nouveaux hôtels et de commerces de détail qui contribueront au dynamisme et à la qualité de vie de la Ville.

Répercussions financières :

Le financement de ce projet vient du Fonds pour les initiatives stratégiques de la Ville. Ce fond est établi pour les initiatives demandées par le Conseil déterminées dans le Plan directeur municipal et pour les projets qui mettent en œuvre les plans directeurs de la Ville et les plans d’Ottawa 20/20. Le 25 juin 2003, le Conseil a approuvé la motion n^o 57/4 dans laquelle on accordait une contribution de 25 millions de dollars au projet du CCO et où on éliminait les conditions précédentes du Conseil liées à l’expansion du projet, sauf la condition selon laquelle le gouvernement de l’Ontario doit confirmer par écrit qu’il est le seul propriétaire du CCO. Conformément à cette motion, une autorisation d’emprunt a été établie et on a créé un compte 903640 pour les rentrées de fonds en 2005.

Pour répondre à la proposition actuelle, une autorisation d’emprunt supplémentaire de 15 millions de dollars est maintenant exigée de la Ville.

Les coûts estimés des paiements sur une débenture de 40 millions de dollars à 4,5 % sur 25 ans représenteraient environ 2,7 millions de dollars. Le personnel a recommandé que 1,5 % du financement total nécessaire au chapitre des immobilisations (159 millions de dollars) soit consacré à la mise en œuvre des lignes directrices axées sur le transport en commun de la Ville, conformément à la recommandation 4(m) du présent rapport, comme moyen de compenser ces coûts et pour aider à atteindre les objectifs en matière de transport en commun.

Aucun autre impôt foncier ne sera réalisé à la suite de l’expansion proposée du CCO. En vertu de l’article 10.1 de la Loi sur le Centre des congrès d’Ottawa, l’organisme d’État est directement exempté des impôts fonciers municipaux tant et aussi longtemps que l’établissement est utilisé à titre de centre de congrès.

Consultation publique/commentaires

La Stratégie économique, le Plan officiel et le Plan directeur de la Ville, qui appuient la situation d’Ottawa en tant que destination internationale pour les congrès et le tourisme, ont été élaborés en consultation avec la collectivité. De plus, le CCO a fait de nombreuses consultations avec l’industrie du tourisme, les planificateurs de réunions et les intervenants dans le cadre de l’Étude de faisabilité sur le réaménagement du CCO qui a été menée plus tôt cette année et qui s’est terminée en septembre 2007.

On a élaboré pour le CCO un plan de communication approfondi ainsi qu’une série de plans d’action. Le plan a été préparé par les conseillers en communication de GBA, qui ont déterminé les publics clés et un cadre de communication. Le cadre de communication est conçu de façon à accroître les communications au fur et à mesure que le projet passe de la conception à l’exécution. Le CCO fait actuellement l’objet d’une campagne de huit semaines dans le cadre de laquelle il y a publication d’une série d’annonces publicitaires hebdomadaires d’une page dans le Ottawa Citizen dans le but de communiquer la proposition de réaménagement au public.

La Chambre de commerce d’Ottawa, les associations de la zone d’amélioration commerciale du centre-ville, Tourisme Ottawa, l’Administration de l’Aéroport d’Ottawa et l’Association des hôtels d’Ottawa-Gatineau appuient la proposition de réaménagement.

BACKGROUND

An expanded Ottawa Congress Centre (OCC) for the nations capital has long been recognized by the local tourism industry, the community and the City as an important way to better market Ottawa as a premiere Tier II Convention destination. The facility would serve as a catalyst for business growth and investment, positive urban design and would assist in revitalizing Ottawa’s downtown. Due to the existing facility’s small size of 70,000 square feet of leasable space (Tier III) and deteriorating condition, it has been unable to attract medium and large-sized conventions. This has served to reduce its economic impact limiting revenues in 2007 to approximately $8.5 million. In comparison to competing Canadian convention facilities in similar sized cities, the OCC is by far the smallest facility ranking behind Edmonton, Calgary, Quebec City, Winnipeg and Halifax.

Over the past decade, several attempts to expand the OCC have been made. The previous effort was initiated in January 2000, with a business case supporting the expansion. The business case envisaged a Tier II convention facility having a vertical expansion over the existing facility resulting in a five-storey building. This was substantially higher than what is currently permitted under existing zoning regulations. By 2003, funding commitments from the Province of Ontario ($30 million – Super Build Millennium Partnership Program), the Government of Canada ($30 million – Canada Strategic Infrastructure Fund) and the City of Ottawa ($25 million) were secured. The City’s approval was based on Motion 57/4 (Document 1), dated June 25, 2003 rescinding previous conditions concerning the hotel and expansion of the Rideau Centre, but conditional upon the Provincial Cabinet confirming sole ownership and responsibility for any cost overruns and budgetary shortfalls of the OCC.

A review of the previous project identified many challenges including: inflexible OCC lease arrangements with the Viking Rideau Corporation (VRC); escalating construction costs; shared parking revenue issues; a challenging redevelopment plan involving an elaborate and costly steel bridge over the existing facility which was to remain in operation during the construction period; and a new floor plate that would end up being problematic for medium-sized conventions.

This led to the Government of Ontario cancelling the planned expansion in February 2006, followed by the Federal Government terminating their funding agreement in June of that same year. The City’s funding contribution agreement was never executed, as it was conditional upon receiving finalized funding agreements from the Federal and Provincial Governments and between the OCC and the VRC. Despite the cancelled expansion plans, all three levels of government encouraged a renewed effort under a new OCC management board with a challenge to address the constraints faced by the previous initiative and a mandate to establish a new solution.

In May 2007, under the leadership of a new Chair and President as well as a Board of Directors, a Feasibility Study on the Re-development of the OCC was commissioned. The new OCC Board established a deadline of September 2007 to find a resolution and a way forward. As part of the feasibility study, the board undertook a site option analysis to set a benchmark for affordability and identify a redevelopment solution. Options evaluated included the existing site with an alternative site at Lebreton Flats. Feedback was received from meeting planners and industry representatives who rated the existing site as a far superior location that can generate a significantly higher economic impact with larger operating revenues.

On September 12th, 2007, the Board of Directors approved the feasibility study and its supporting business case. This work calls for the demolition of the existing building and the construction of a larger, state of the art convention facility. The new convention centre would have 200,000 square feet of rentable space including a clear span, 100,000 square foot, column free convention room that would eclipse the current larger meeting room in the existing convention centre by approximately 57,000 sq feet. The Centre would be enabled with the latest technology, energy efficient design elements and would be open for use by 2011. It would renew, revitalize and become a signature project within the heart of the City’s downtown.

The following summarizes the new Ottawa Convention Centre project:

New OCC Building

To remain at the current downtown location next to the Rideau Centre

200,000 square feet of rentable space, with over 100,000 square feet of contiguous column free space to meet the demands of large conventions
Estimated 340,000 square feet total size
3+ floor level design solution
Demolition of existing building except sub-grade levels.
Alignment of floors with the Rideau Centre and its roof top park.
Total capital construction cost of $159.4 million
LEED (Leadership in Energy and Environmental Design) Silver Certification

OCC Financing

Government of Canada $50 million
Government of Ontario $50 million ($30 million previously committed and with the OCC from - Millennium Partnership Initiative Fund)
City of Ottawa $40 million ($25 million previously committed)
Ottawa Congress Centre $30 to $40 million (new debt financing required)
Total upset limit of project costs $180 million (accounts for contingencies, operating losses during construction, development charge fees, building permit fees, planning approval fees, and HR transition costs)

Business Model

OCC construction debt financing to be secured by the Government of Ontario.
Construction contract to be a design/build guaranteed “maximum price” contract to manage risk of cost overruns.

New target markets (medium and large conventions/tradeshows) that yield highest economic benefit.
Various revenue sources including a financial sustainability payment of $1.5 million from organizations such as the Ottawa Airport and the Ottawa Gatineau Hotel Association. (currently under negotiation).
Revenues projected from the operations of the OCC and other sources to reach approximately $17 million in 2012 to $28 million by 2020 (source: OCC business plan).
Annual operating surpluses net of debt servicing and life cycle contributions will provide sufficient cash flow to service project debt.
Property tax exemption through the Ottawa Congress Centre Act.

Governance Model

The OCC is a Crown Agency with the majority of Board members appointed by the Province.
Provincial approval required for any borrowing.

Investigating governance model transformation alternatives (e.g. Ottawa Airport Authority) to secure a broader business mandate and expansion of board representation.

Urban Environment

Realignment of Colonel-By Drive to accommodate new development.
Building design will accommodate linkage solution to Government Conference Centre, National Art Centre, Rideau Centre and Mackenzie King Bridge
The public realm rebalanced in favour of pedestrians
Canal Frontage enhancements (e.g. landscaping and pedestrian pathways)

Lease

OCC has negotiated a new 80-year lease with the Viking Rideau Centre (VRC). VRC is the landlord and owner of the land (3.45 acres) and building envelope.
Permits effective ownership
Redefined land area includes air and subsurface rights.
Permits internal renovations without consent from the VRC (unless impacting on Rideau Centre systems, building or lands) and will allow up to 3 additional refurbishments or redevelopments of the congress centre building after the first 20 years of the lease.
Rent of land for $1 per year
Ancillary uses permitted (e.g. business centre, coffee shop)
Dispute resolution process through Joint Steering Committee to manage construction interface between the OCC and the Rideau Shopping Centre.

Schedule

Commence demolition September 1st, 2008 for 6 months
Construction 24-26 months
Open April 1, 2011

HR Plan

Carefully constructed HR Strategy including severance costs and an outplacement program to assist employees with their job search in the 3^rd quarter of 2008 (approximately 400 positions)
Rehiring to commence in January 2011 to allow for training period of new and returning employees.

DISCUSSION

The City of Ottawa has consistently supported the expansion of the OCC and continues to support Ottawa as an international convention and tourism destination. These commitments have been reinforced through policy priorities in the City’s Economic Strategy and the City of Ottawa Official Plan as well as the City’s strategic economic advisory group (The Ottawa Partnership - TOP) who advised the Province as recently as April 2007 of their continued support for this new facility. As a G8 capital and fourth largest metropolitan area in Canada, the size of Ottawa’s primary meeting and convention centre space is inadequate. Ottawa continues to turn away medium and large sized conventions and events due to lack of capacity. This creates a competitive disadvantage and an under-performing local tourism sector, which is the third largest business sector in Ottawa.

Economic Impact

In 2005, more than 180,000 people used the OCC with at least 80,000 patrons coming from other parts of Canada, the United States and the rest of the world. An expanded Ottawa Congress Centre is expected to nearly double out-of-town delegates per year and will attract new visitors, skilled workers, business and cultural events.

It is not only the visitor attraction and significant economic impact that the OCC will generate that is important, but also how a new facility, in a key downtown location within the City, will serve as a catalyst for positive physical and quality of life enhancements. A new OCC will attract new investment, businesses and jobs to the downtown core which will assist the City revitalize and improve the physical appearance of this area. This will attract more tourism spending and cause new taxes to be generated that can be directed at some of the social issues in this area. More direct action on the social issues in the downtown area is currently being discussed with the Ward Councillor and the OCC. These ideas are at a preliminary stage and will be expanded upon at a later date. Through the City’s $40 million investment, an additional $140 million will be leveraged from the Federal and Provincial Governments on the facility. This will result in a major public facility that will benefit the Ottawa economy and the downtown precinct.

In 2007, an economic impact study was completed on behalf of the OCC by the Market Research Corporation, which documents the following benefits:

· 1500 construction jobs directly related to the OCC expansion

· 4500 jobs indirectly related to the OCC expansion

· 80,000/year of additional out-of town guests to the Ottawa Gatineau Region once the OCC is expanded. Based on a new total of 160,000/year of out-of-town guests, users of this larger facility will generate:

o demand for 660,000 room nights of accommodation on an annual basis

o $110 million in annual revenues for the hotel sector (2,669 FTE’s)

o $19 million in sales for the retail sector (158 FTE’s)

o $15 million in revenues for restaurants and bars (189 FTE’s)

o $3.9 million in revenues for the local taxi industry, car rental and other transportation components.

· Approximately 1400 additional hotel rooms will be required for a total of 2800 rooms

· $51 million in Federal and Provincial income taxes during the construction phase

· Ongoing annual Federal income taxes of $26.5 million

· Ongoing annual Provincial income taxes of $17.4 million

· Total ongoing annual Municipal taxes of $19.5 million of which approximately $9 million will be generated from the anticipated expansion of Ottawa’s retail, restaurant, bar, hotel, service commercial industries to serve the new OCC delegates.

In summary, there will be significant short-term construction and ongoing permanent economic benefits for the City due to the OCC expansion. The short- term impact of spending $159 million in Ottawa will be significant. As stated above the construction of the facility will stimulate over 6000 new jobs during the construction period. New construction of this magnitude triggers broad economic multipliers resulting in many new goods and services to be purchased in the community.

Ottawa as a G8 capital will have a new convention centre facility that it can showcase to the world. The City will gain a competitive edge in the international convention centre business and will be well positioned to compete against other Canadian Cities who are currently planning and building new convention centres facilities as a means of boosting their economic prosperity.

Qualitative Improvements

Staff and KPMG have undertaken a review of the OCC financial model and business plan and benchmarked the current proposal against the previous development constraints to ensure they have been addressed. The new Board of the OCC have presented a vision and implementation plan on the basis of a detailed feasibility study with the goal of identifying previous constraints and to identify a way forward. The results of this analysis can be summarized as follows:

Previous Financial Model

The previous financial model established a project budget requirement of $94.5 million and was based on the following funding contributions:

Federal Government - $30 million
Provincial government - $30 million
City of Ottawa - $25 million
Viking Rideau Corporation - $4 million
Ottawa Congress Centre - $5.5 million in debt financing.

An additional $31.5 million was also required for the extensive refurbishment of the existing facility bringing the total project amount to $126 million.

For comparative purposes, the new OCC Board requested Hanscomb Cost Consultants this year to assess the current cost of the previous plan. Hanscomb is an international firm specializing in cost planning, control and value management services. Hanscomb concluded that should the Board go ahead with the previous design, the final costs would be much higher. Some of these costs related to the complexity of the proposed structure and its height, its interface with the existing Rideau Centre, the use of costly steel structure elements, new earthquake code requirements and scheduling uncertainties.

Current Financial Model

The OCC Board’s current vision and financial model is predicated on shutting down the existing facility, removing most of the internal elements and rebuilding a larger convention centre. To undertake this work, a capital construction and fit-up budget of $159 million will be required.

The breakdown to meet the capital construction and fit-up cost component is as follows:

Federal Government - $50 million (36% of public sector funding),
Provincial Government - $50 million (36% of public sector funding)
City of Ottawa - $40 million (29% of public sector funding)
The OCC – $19 million to be used to address the balance of capital and fit-up costs

The OCC’s share of the capital costs ($19 million) and an additional upset amount of between $10 to $20 million for project/transition related costs are to be financed by the OCC through the Ottawa Congress Centre’s operating revenues and from other sources related to the City’s Tourism industry and airport.

Federal and Provincial Funding Source

The source of the Federal and new Provincial Government contributions is unknown at this time. Federal funding for this project may be provided from the $4 billion Canada Strategic Infrastructure Fund (CSIF). This is one of many specific funding programs that reside under the Government of Canada’s “Building Canada” $33 billion infrastructure plan. The CSIF is designed for projects of major federal and regional significance that enhance quality of life and promote economic activity including tourism. Federal funding from the CSIF would not detract from Federal funding support to municipal infrastructure projects (local roads and bridges) supported by the $17 billion Gas Tax Fund under the same umbrella “Building Canada” infrastructure plan. Provincial funding in the amount of $30 million has already been received by the OCC. This money and its interest will be directed into the project once it receives approval. The funding source of the additional $15 million requested from the Province is not known at this time.

Given the current vision for a Tier II convention facility starting in 2008, the OCC and Hanscombe’s analysis has resulted in an order of magnitude increase in project costs from the previous proposal. Cost increases that are proposed to be shared with the funding partners will cover elements such as: construction inflation; demolition costs; and revenue loss for the closed operations during the demolition/construction period. Other transition costs will be the responsibility of the OCC and Province.

Municipal Fees and Charges

All development charges, building permit fees and other planning permit fees and approvals valued at approximately $4 to $4.5 million, will be paid for by the OCC.

Revenues and Private Sector Contributions

Operating and debt servicing for the OCC loan will be repaid from the revenues generated from a larger Tier II facility that will attract new business from the Canadian convention market, U.S. convention market for association and corporate business, international convention market, and the North American consumer and trade show market. In addition, the OCC is seeking revenue opportunities from the airport and tourism industry.

Specifically, private sector support in the amount of $1.5 million is being negotiated with organizations such as the Ottawa Gatineau Hotel Association (OGHA) and the Ottawa Airport Authority. Agreements are currently being negotiated and are to be completed prior to the execution of the City’s Contribution Funding Agreement. These funds will help offset the OCC’s debt repayment and ongoing operations.

PriceWaterhouseCoopers compiled financial projections of operating and capital costs for the reconstruction on behalf of the OCC. PriceWaterhouseCoopers concluded that based on their pro forma, which includes OCC event and tourism revenues, the new centre is estimated to generate $17 million in 2012 increasing to $28 million by 2020. This will result in annual operating surpluses starting in 2013 of $.5 million rising to $4.3 million by 2020. The operating surpluses and cash flow will be used to service the project debt.

The City hired KPMG to undertake an independent evaluation of the business plan. KPMG has indicated that the financial forecasts are reasonable and within the range likely to occur. However there remains some risk that these projections may not materialize and under the proposed structure, the Government of Ontario as owner of the facility would be impacted. To mitigate this risk, staff have included a recommendation in the report that speaks to the Province identifying that it will continue to “own” or demonstrate financial responsibility for OCC debts despite a possible change in the governance structure of the OCC.

Architecture and Engineering

The current proposal would demolish the existing facility except for the sub-grade levels. A new convention facility will then be constructed which aligns the OCC floor levels with the Rideau Centre and the roof top park. A design and construction agreement between the OCC and the VRC will address all building interface issues.

The current architecture requires a new vertical and horizontal expansion from ground level with over 200,000 square feet of rentable convention and meeting space. Over 100,000 square feet of contiguous convention space will be available on one floor (see Document 2). The vertical expansion will be an addition of two new floors. The horizontal expansion will be accomplished by extending the existing floor plates on two levels outward toward Colonel By Drive and Daly Avenue. The existing B1 and B2 Levels will also be extended outwards horizontally. Overall, the present design is much more in keeping with the City’s height limits and zoning requirements and can be addressed through the Committee of Adjustment.

Transportation

The new redevelopment option includes a proposed realignment of Colonel By Drive resulting in a one lane northbound cross section, south of Daly Avenue, in front of the convention centre with an enhanced pedestrian and landscaped environment. The planned road realignment is also intended to address current aggressive traffic conditions that are contributing to an unfriendly pedestrian environment along Colonel By Drive. This will also allow for upper level projections of the building over what is now the existing Colonel By roadway to achieve the floor space needed for the new facility.

On behalf of the OCC, Delcan has conducted a traffic analysis with support from Stantec Engineering. Solutions to assess the proposed realignment have been examined. The conclusion was that the existing two lane northbound cross section can be reduced, south of Daly Avenue, while maintaining acceptable traffic operations at the Colonel By/Daly Avenue intersection.

The City’s Traffic and Operations Branch have conducted an initial review of the narrowing of Colonel By Drive northbound from two lanes to one lane as proposed. In summary, northbound p.m. and a.m. traffic along Colonel By Drive is controlled by the intersection at Rideau and to a much lesser extent at the traffic signal at Daly Avenue. Consequently, as Rideau Street is the controlling intersection and serves as the bottleneck, the assessment to date is that the reduction of Colonel By Drive to one lane going north, south of Daly Avenue, will simply create a longer queue in the single lane, south of Daly Avenue, rather than distributed over two lanes. Provided there is a right-turn lane approaching Daly Avenue of adequate length and this intersection has appropriate signalization, the number of northbound lanes south of that point will not negatively impact on existing traffic patterns.

Based on the preliminary review undertaken, staff are satisfied that the concept of narrowing Colonel By Drive can be implemented without compromising the operation of the area road network. A roundabout at Colonel By Drive and Daly was also identified as a possible alternative for the Daily/Colonel By intersection. The specifics and details need to be pursued and planned by the OCC through the City’s and NCC’s Development Approvals process.

Downtown Urban Design Guidelines\NCC Core Sector Policies

The urban design strategy created jointly by the City and the NCC applies to the downtown precinct in which the OCC is located. The proposed Congress Centre will be subject to design review by the City’s Downtown Design Review Panel. However, due to restrictive covenants that have been placed on the Congress Centre/Rideau Centre complex, the ultimate design authority for this project will be the NCC. The NCC also has ultimate authority to any modifications to Colonel By Drive as an NCC Parkway.

The role of the City’s design review panel will be to provide comments to the NCC for their consideration in giving NCC design approval. In this regard, the NCC will also assess the project in the context of the NCC Core Sector policies. Parks Canada will also have input as it governs the operations of the Rideau Canal as a world heritage site.

Concerns expressed with the previous design as stated by the National Advisory Committee on Planning Design and Realty (ACPDR) pertained to: the large size of the building envelope; the pedestrian arrival experience; protection of views to the Rideau Canal and Parliament; and reinforcement of Colonel By Drive as a ceremonial route with landscape treatment on both sides.

Similar to the transportation review, the National Capital Commission (NCC) and the City of Ottawa have agreed to join forces to ensure a consistent approach to the design solution and to work closely with ACPDR. At present, plans are still in the concept design stage and the OCC is seeking approval on fundamental design elements that will make this a success prior to going into schematics.

Present objectives for ACPDR are consistent with those expressed on the previous proposal. Initial comments have been that the redevelopment of the Congress Centre should be designed to serve as a catalyst for key fundamental urban design changes in the vicinity and that OCC should ensure that the proposal responds to the following design considerations:

§ Rebalance the public realm in favour of pedestrians (public domain sidewalks and gracious forecourt to main entrance).

§ Recognize the location as a Capital entry and consider views to the Parliament and Chateau Laurier.

§ Enhances the Rideau Canal Frontage (vegetation and trees in a viable growth medium).

§ Consider appropriateness for planned pedestrian linkages to Government Conference Centre, National Arts Centre, Mackenzie King Bridge and Sparks Street.

An overall design solution will be articulated by the National Advisory Committee on Planning Design and Realty (ACPDR) and considered prior to final NCC directives. This is scheduled to be addressed and finalized in advance of any contribution funding agreements.

Lease with Viking Rideau Centre

At present, the $1.00 annual lease between the OCC and the VRC is similar to a retail tenant lease limiting the OCC to a prescribed space and requires the VRC support to make any alterations or to obtain a leasehold mortgage. Effective ownership was identified as a necessity to permit the OCC to finance debt, carry out its business and control its future. Overall, the previous development plan was severely hindered due to the inflexibility of the lease and had no process for resolving disputes.

Negotiations for a new long-term land lease began in June 2007 and continued to September 2007. A long-term 80-year land lease is being finalized by the OCC and the VRC. The new lease redefines air and sub-surface rights and addresses any redevelopment or internal changes in the future. It will also permit the OCC to obtain a leasehold mortgage, permit ancillary uses, and allow internal renovations and a dispute resolution process leading to mediation. As part of this lease, a design development and construction agreement will be required between the two organizations to spell out how redevelopment will take place.

As a condition of approval, the City is asking for a copy of the finalized lease to ensure the terms of the lease are satisfactory to the City as well as to review issues pertaining to the design, development and construction agreement.

Governance Model

The OCC is a Crown Agency as defined under the Public Service Act and in accordance with the Ottawa Congress Centre Act, 1988. This means that the OCC is governed by a Board of Directors accountable to the Ontario Ministry of Tourism but administratively independent of the Government of Ontario in its day-to-day operations. Generally, operations are not funded by the Government but the Government of Ontario is the “owner” and ultimately accountable for any financial liabilities or debts that the OCC attracts. Given the Government of Ontario’s long-term exposure to liability as owner, it has a vested interest in ongoing funding strategies presented by the OCC that will minimize its risk. This includes considering an alternative governance model such as that of the Ottawa Airport Authority, if it could be proven to enhance economic success and sustainability of the OCC. If an alternative governance model were to be pursued similar to the Ottawa Airport Authority, changes to the Ottawa Congress Centre Act would be required that may no longer leave the OCC as a Crown Agent. In any alternative governance model, the OCC would have to remain non-profit to retain its tax-exempt status.

If an alternative governance model is pursued by the OCC, it will take time and must be proven to be beneficial. In the interim, the Government of Ontario will be required to provide parent guarantees to support the construction debt financing of the OCC. This requires authority issued by the Ontario Cabinet (Ontario Financing Authority Section 28) to provide security to the lender as if it were provincial debt. As well, to ensure the City is widely protected from any substantial future changes to the Ottawa Congress Centre Act, the City will be seeking written assurances from the Government of Ontario that it will continue to “own” and/or satisfactorily demonstrate financial responsibility for OCC debts under existing or future governance models as a component of the City’s funding contribution agreement.

LEEDS (Leadership in Energy and Environmental Design) Silver Certification

With staff’s support and encouragement, OCC intends to undertake a triple bottom line approach on this project treating social (discussions currently underway with the Ward Councillor and OCC) and environmental considerations on an equal footing with economic considerations. On the environmental front advanced environmental design and construction will be incorporated into the redevelopment to meet a number of objectives including:

§ Minimizing greenhouse gas emissions;

§ Water efficiency to reduce consumption and address storm water run-off; (e.g. green roof technology)

§ Healthy Indoor environment through ventilation, daylight and building materials;

§ Restoration of green space at ground level and on the roof top;

§ Recycling and waste reduction program

§ Environmental Procurement Policies and priorities; and

§ Energy efficiency and renewable energy

Parking

The Design and Construction Agreement between the OCC and the VRC will deal with parking and building interface issues with the Rideau Centre. This is a mechanism developed in response to previous constraints between the two parties concerning shared parking and construction issues. Under the City of Ottawa Comprehensive Zoning By-law, all the parking provided by the Rideau Centre can be used to satisfy the parking of both the Congress Centre and the Rideau Centre. Irrespective of the zoning by-law, the City’s Official Plan policies support reduced parking in the downtown. S.2.3.1 (Policy 42) of the Official Plan states that - "The City maintain the following strategic objectives related to parking: a) To provide short-term parking that supports the vital interests of local businesses/ institutions and tourism destinations; b) To limit the supply of long-term parking to levels that balance the needs of automobile users with the City's transit ridership objectives, while minimizing spill-over parking in residential areas; c) To minimize the amount of land devoted to parking uses through shared parking arrangements and the use of parking structures.

The City’s Parking Management Strategy has also instigated changes to the City’s comprehensive zoning by-law reducing parking requirements for long-term parking where specific criteria are satisfied that contribute to walking, cycling and transit use and for uses within 600 metres of a transit station.

To ensure the current parking in the Rideau Centre is maintained and available over the long term, the VRC will be renovating its red garage, which provides a parking supply of approximately 700 spaces. Renovation activity is scheduled for January 2008.

Mass Transit Planning

The City is currently investigating the feasibility of a tunnel under the downtown to accommodate transit demands. An Environmental Assessment (EA) is being initiated to identify potential constraints and opportunities for a tunnel. An underground transit station at or near the OCC site is a viable option that will be considered through the EA. The City also recently approved Transit Oriented Development Guidelines for new development. These guidelines provide direction to the design and review processes for plans of subdivision, site plan control, rezoning and Official Plan Amendments and encourage an approach that blends transit with urban planning and provides context for detailed site-specific planning, design and engineering solutions.

In this case, the guidelines are particularly pertinent to the quality and design of the public realm including spaces along public sidewalks and internal pedestrian walkways leading to and from transit stops or stations. Consequently, all expansion plans shall address the principles of the transit Oriented Development Guidelines, particularly if the City proceeds with an underground transit system in the downtown or identifies an alternative mass transit solution. This requires an appropriate identification of funds by the OCC for implementing planning and design solutions. The City is specifying 1.5 % of the final construction budget of the OCC for purposes of implementing measures that will appropriately facilitate linkages to a transit station at or near this location.

CONSULTATION

The City’s Economic Strategy, Official Plan and the City’s Corporate Plan, developed in consultation with the community and The Ottawa Partnership (TOP) support Ottawa’s status as an international convention and tourism destination. The OCC has also undergone extensive consultation with the tourism industry, meeting planners and stakeholders as part of the OCC Redevelopment Feasibility Study initiated earlier this year and completed in September 2007.

A comprehensive communications plan has also been developed for the OCC with a set of action plans. The Plan was prepared by GBA communication consultants who have identified key audiences and communications framework. The communications framework is designed to step up communications strategically, effectively and immediately to see the project through from conception to completion. The OCC is currently undergoing an eight-week campaign with a series of full-page weekly ads in the Ottawa Citizen to communicate the redevelopment proposal to the public.

The Ottawa Chamber of Commerce, the downtown Business Improvement Area Associations, Ottawa Tourism the Ottawa Airport Authority and the Ottawa Gatineau Hotel Association and Algonquin College have endorsed the redevelopment proposal.

FINANCIAL IMPLICATIONS

The estimated costs of payments on a $40 million debenture issued by the City at current rates over 25 years would be about $2.9 million.

No additional property taxes would be realized as a result of the proposed OCC expansion itself. Under Section 10.1 of the Ottawa Congress Centre Act, 1988, the crown agency is directly exempt from municipal property taxes as long as the facility is used as a convention centre.

To ensure the public funding for this project is expended in an open, transparent and fair way, staff have required the OCC undertake a competitive process, pre-approved by the City for the acquisition of all equipment, services, supplies used in the building and during the construction.

SUPPORTING DOCUMENTATION

Document 1 – Motion 57/4

Document 2 – Design Concept Plans

DISPOSITION

The Planning, Transit and the Environment Department will prepare a letter to be sent to the Federal and Provincial governments under the Mayor’s signature indicating the City’s support for the Ottawa Congress Centre Project.

Legal Services will initiate preparation of a Funding Contribution Agreement to be executed by the City Manager when all of the recommendations in this report are satisfied.

DOCUMENT 1

MOTION 57/4

Moved by Councillor G. Hunter

Seconded by Councillor J. Harder

WHEREAS the City of Ottawa had made its support for the Congress Centre expansion conditional on equivalent funding from the Federal and Provincial governments and on a sizeable contribution from the private sectors;

AND WHEREAS those contributions have now been secured and are on the table;

AND WHEREAS the Congress Centre expansion plans are well developed and ready to proceed while transit expansion plans are not as well advanced;

THEREFORE BE IT RESOLVED that Ottawa City Council re-affirm its commitment from March 27, 2002 and March 26, 2003 to provide a contribution of $25 million for the expansion of the Ottawa Congress Centre, to be paid by a debenture in that amount, that will be re-paid by the incremental tax revenue generated by the expansion of the Ottawa Congress Centre;

AND further be it resolved that this contribution be provided to the Ottawa Congress Centre upon the receipt of a building permit for the project by the Ottawa Congress Centre;

AND FURTHER BE IT RESOLVED that previous conditions be rescinded but that the City’s commitment remain conditional upon Provincial Cabinet confirming its sole ownership of the Ottawa Congress Centre, and confirming that it has full and sole financial responsibility for any cost overruns, budgetary shortfalls and any and all other financial obligations relating to the Ottawa Congress Centre.

CARRIED

DOCUMENT 2

CONCEPT DESIGN PLANS

Corporate Services and Economic Development Committee

Report 17

28 november 2007

Comité des services organisationnels et du développement économique

rapport 17

le 28 novembre 2007

Extract of draft Minutes 18

19 november 2007

Extrait de l’ébauche du procès-verbal 18 – le 19 novembre 2007

CITY OF OTTAWA SUPPORT FOR OTTAWA

CONGRESS CENTRE REDEVELOPMENT PROJECT

APPUI DE LA VILLE D'OTTAWA POUR LE PROJET DE

RÉAMÉNAGEMENT DU CENTRE DES CONGRÈS D'OTTAWA

ACS2007-PTE-ECO-0023 CITY-WIDE / À L'ÉCHELLE DE LA VILLE

Appearing before the Committee on this matter were Rob Mackay, Director of Economic and Environmental Sustainability Branch (EES); Dave Powers, Consultant, Economic Development Division; Jim Durrell, Chair of the Ottawa Congress Centre Board of Directors; Pat Kelly, President of the Ottawa Congress Centre; and, Graham Bird, Congress Centre Development Advisor.

Mr. Mackay briefly spoke to a PowerPoint slide presentation, which served to provide the Committee with an overview of the staff report. A copy of this presentation is held on file with the City Clerk.

Speaking to the item, Mr. Durrell indicated he could not recall a project of this magnitude receiving such overwhelming support, noting that very large projects normally elicited all sorts of opinions from all sorts of people. He reported that the Ottawa Congress Centre (OCC) Board and management were delighted to receive an overwhelmingly positive response from the public at large when they announced this project. From this response, they concluded that they had done their homework. He felt this should be a very important consideration for Council. He maintained this was not a group of ideologues. It was a group of men and women from various backgrounds with a long tradition of public service in this City. He discussed the state of the project when it was inherited by the current OCC Board and he submitted that what had transpired in the past year should give Council some comfort. He referenced the recently announced Provincial and Federal government contributions for a total of $100M and the eighty-year lease agreement with Viking Rideau for $1, which would allow the OCC to run its business for the next 80 years. He acknowledged that Viking would benefit from the Congress Centre expansion, however he felt the agreement was a huge vote of confidence from the private sector and a major step forward for the OCC Board. Mr. Durrell talked about the support demonstrated by the National Capital Committee (NCC) and City staff in moving this project forward, noting it had given the two organizations an opportunity get together to implement their urban design strategy to make Ottawa’s downtown a more livable place. He then discussed the support shown by the local tourism industry. In conclusion, he explained that he mentioned the support of these various groups and organizations because he believed that whenever that many diverse groups came together to unanimously support a project, it suggested that something right was happening. He acknowledged that it was not perfect and that there would be issues as it moved forward. However, he assured Committee that there was a sound thought process and a strong team behind this process and that it would be brought in under budget and within its schedule.

Mr. Kelly discussed topics, which he hoped would give Committee and Council a strong level of comfort and confidence with respect to this project; the current state of Ottawa’s tourism industry; market opportunities; and the OCC business case.

He submitted that prior to bringing this project forward, Ottawa’s tourism industry was somewhat fragmented. However, he report that with the help of the Ottawa Gatineau Hotel Association and Ottawa Tourism, the lines of communication had been opened, industry representatives were working together and a strong element of trust had developed. He advised that in addition to tourism industry representatives, this project had united various groups and organizations such as: the Ottawa Centre for Research and Innovation (OCRI), The Ottawa Partnership (TOP), the Ottawa Chamber of Commerce, and Viking Rideau Corporation. Furthermore, he indicated the OCC’s employees and union were fully supportive of the plan and that they had negotiated a transition arrangement for their employees.

With respect to market opportunities, Mr. Kelly submitted that with its current 70,000 square feet of convention space, the Congress Centre could only deal with a very limited slice of the Canadian convention market. He explained that as a city and as the Nation’s capital, Ottawa had finer attributes than any other tier two convention destination in the country in terms of its world class airport, flights from many cities across North America and Europe, quality and quantity of hotel rooms, greenspace, and cultural and entertainment attractions. However, he maintained that Ottawa’s current tier three convention centre caused it to leave a tremendous number of business opportunities on the table in terms of its ability to compete in the convention market. He stressed that this project would enable the Congress Centre to run small to medium-sized conventions concurrently and to accommodate large conventions, which it currently could not do. He discussed the fact that the OCC would be able to continue to serve its current market at the same time as it would be able to pursue a much larger market, such as national and international conventions, of Canadian, American and international groups, as well as political events. He noted that a large number of organizations made it a habit of meeting in capital cities around the world and he submitted that with this expansion, Ottawa would become an option for such groups. He advised that local associations, departments of federal government and university faculties would work with the OCC to sponsor organizations to meet in Ottawa from Europe and other parts of the world. He announced the recent hiring of a new Vice-President of Marketing, who was a season industry veteran, and advised that the new President of Ottawa Tourism also had a tremendous amount of experience with respect to running destination marketing organizations.

Mr. Kelly noted that the construction period would run from September 2008 to April 2011 and reported that currently, the OCC had 15 conventions booked for that time period. To put this in perspective, he advised that for the same time period, Quebec City had 47 conventions on the books and Edmonton had 40. He maintained that this demonstrated the degree to which Ottawa was missing out on business opportunities. He submitted that there was tremendous pent-up demand for a larger and a new facility and indicated that, since their announcement on September 18, the OCC had been approached by numerous organizations about the prospect of holding their conventions in Ottawa post April 2011. As a result, he reported that, pending approval of the redevelopment plan of the Ottawa Congress Centre, there were 51 conventions tentatively booked from April 2011 to the end of 2014. In closing, he stated that Ottawa had the potential to be amongst the finest convention destinations in North America and the world, that the OCC had a plan, and that the time was right to put it into place.

Wrapping up, Mr. Durrell referenced December 7, 1983, the day the current Ottawa Congress Centre opened its doors. He recalled that these were heady days and that there was an enormous sense of pride because the OCC suddenly made Ottawa a world-class City and it heralded an incredible period of growth in the downtown. He noted much had happened in the last 25 years. He submitted that the beautiful, glorious building had ostensibly slid down the mountain and that Ottawa’s downtown had not grown the way many would like to see it grow. He referenced social and development issues in the downtown and he indicated he believed the new Congress Centre would do for Ottawa today what the current Congress Centre did for it 25 years ago. He suggested members of Council would have very few opportunities to make legacy votes, but that they had such an opportunity with this project.

Councillor El-Chantiry indicated that he was the benefit of the project. However, he was concerned about funding sustainability. He noted that the City would have to issue debt in order to contribute $40M, which would result in an annual pressure on its operating budget. He further noted that the Ottawa Congress Centre did not pay property taxes to the City. Mr. Kirkpatrick indicated the Ottawa Congress Centre was a crown agency of the Provincial government and that under Section 10.1 of the Ottawa Congress Centre Act, 1988, it was exempted from municipal property taxation. He also confirmed that if the City’s contributed was funded through a 25-year serial debenture, there would be an annual debt servicing cost of approximately $2.9M, assuming interest rates remained constant.

Councillor El-Chantiry referenced the amount of property taxes that would be generated through this facility and he wondered if the OCC Board would agree to asking the Province to lift the provision of the Act with respect to municipal taxation exemption, at least partially, so that the City could recover some of its contribution.

At this juncture, Mayor O’Brien suggesting talking about the incremental taxes that would flow to the City as a result of this expansion in order to get a better perspective of the two budget pressures.

Mr. Durrell felt Councillor El-Chantiry had raised a valid point. He recognized that every time the City borrowed money, the question had to be asked as to whether or not there was a payback. He noted that when the City builds a new arena or community centre, those dollars are invested in bettering the community. Therefore, in the weighting of all things, the weight for economic benefit is put aside in recognition of the other benefits. He submitted that in this case, the weighting went further than the economic benefit. He indicated the Rideau Centre was the highest single tax payer in the City of Ottawa and, as a result of this project, it would embark on its own expansion and generation approximately $2.5M to $4M in additional property taxes. He referenced the Westin Hotel, which paid $3M in property taxes, and noted that as a direct result of this project, one or two new hotels would be built, generating additional tax revenue for the City. Therefore, he submitted that even without considering all other economic development benefits associated with this project, and solely based on the additional, incremental tax revenues that would be generated, the City could easily justify the debenture costs associated with the City’s contribution.

Mayor O’Brien felt this needed more clarification. He referenced page 364 of the agenda package, which talked about ongoing municipal taxes of $19.5M. He understood these figures were based on an independent report and he asked staff to elaborate on it. Mr. Mackay indicated a separate report was completed by the Market Research Corporation and it identified that, given the economic impact across the various business sectors of this many delegates (160,000 per year) coming into Ottawa would cause businesses to expand their operations and therefore pay additional property taxes. He explained the report looked at all business sectors that would be affected, including retail, hotel, restaurant, transportation and service industries. Therefore, of the approximately $19.5M in ongoing annual municipal taxes, approximately $9M would come from the expansion of related business sectors. Mr. Mackay further advised that, as part of their due diligence and in order to verify these findings, staff reviewed this report with the Market Research Corporation and then again with KPMG, which was the City’s consultant.

Councillor El-Chantiry was concerned by the $2.9M annual debt servicing charge the City would be carrying as a result of this contribution and he wondered if ways had been explored to recover this on an annual, sustainable basis; either a room levy, asking the Province to pay a portion of the property taxes that would otherwise be charged to the OCC or some other means. He felt staff had prepared a good report. He was pleased that jobs would be created. However, he maintained the City would still have to come up with $2.9M from its taxpayers each year for a number of years in order to service the debt related to its contribution.

Mayor O’Brien directed the Councillor’s question back to the explanation provided by Mr. Mackay; that the Congress Centre would create an incremental $9M in property taxes. He submitted that even if this estimate was too optimistic by 300%, it would still generate enough additional tax revenue to cover the City’s ongoing debt servicing costs.

Councillor El-Chantiry maintained that growth cost the City. It did not pay for itself. Therefore, he was looking for some idea to help the City offset these costs. Mr. Kirkpatrick acknowledged that staff often talked about growth not being in the City’s best financial interest. However, he indicated this typically related to residential growth. He explained the kind of assessment growth identified in the referenced study was commercial assessment, which would be on the plus side versus residential growth where the City could never generate enough taxes to support the related operating costs and debt servicing costs.

Councillor Wilkinson inquired as to the GST and PST that would be paid to the Federal and Provincial governments once the new Congress Centre was operational. Mr. Kelly indicated the OCC currently generated annual revenues of approximately $10M and that, post-expansion, its revenues would be between $20M and $25M annually. He did not have figures with respect to what this would represent in terms of GST and/or PST revenues to the upper levels of government.

Councillor Wilkinson reported hearing that the Provincial and Federal governments would have their $50M contributions entirely repaid to them within 3 to 5 years from the additional PST and GST raised directly by the Congress Centre. Mr. Kelly confirmed this.

Speaking only to the direct operations of the Congress Centre, Councillor Wilkinson noted that the Provincial and Federal governments would also be receiving income tax whereas the City would only receive payment for the facility’s water bill, which was directly related to its usage. Therefore, again speaking only to the direct operations of the Congress Centre, she maintained that the City would get nothing. Mr. Kelly confirmed this.

Councillor Wilkinson submitted that spin-offs happened with any economic development. Although she acknowledged that this project had a higher multiplier effect, she disagreed with the valued given to the multiplier effect in this case. She indicated it had been pointed out that new development had a cost. She noted that jobs would be created and argued those people will need housing, which would have to be subsidized from the tax base. She acknowledged that it would probably happen in time, but she maintained that it was all theoretical and she had difficulty with giving $40M when the City could not afford to fix its own roads and buildings. She stated that, because of the problems with which they would be wrestling over the coming weeks, this was difficult for members of Council.

Mr. Durrell recognized the challenges faced by City Council and the fact that a project of this magnitude could not be treated lightly, either by Council or by staff. He referenced the City Manager’s report, noting staff could have easily pushed this off. However, he stressed that despite these very difficult time, staff had come forward with a very positive report. He noted the comments made with respect to the direct financial benefits to the upper levels of government. However, he maintained that, even if the multiplier effect was cut in half, the payback to the City would be enormous. He submitted he was optimistic that the City would get its money back in two to three years and that even if he were pessimistic, he would estimate the City would get its money back in four to five years. He stressed the impacts were there and that the referenced paybacks did not include the expansion of the Rideau Centre of the construction of a new hotel, which he was sure would happen.

Councillor Wilkinson argued the scenario also did not include the cost of municipal services, which the Congress Centre would need, such as policing.

Mr. Durrell suggested development fees would cover the Centre’s service needs.

Councillor Wilkinson maintained that development fees would not pay for the City’s on-going operating costs relative to this facility or additional downtown development. She noted that when Scotiabank Place was built, it was done without a financial contribution from the City. She also noted that during the second day of the present meeting, Committee would be dealing with a proposal for a community concert hall, which was also an economic development generator but was being treated differently from this one. She wondered who one could differentiate between one project and the other in terms of how they were being treated.

Mr. Durrell indicated he would let the Ottawa Chamber Music Society speak for themselves with respect to the concert hall project. However, with respect to the OCC project, he advised that the Congress Centre would be debt financing $40M for its own portion of the project costs and that the project would not go forward unless they could generate upwards of $3M annually to offset lifecycle and debt servicing costs. Although he was acutely aware of the level of government funding being contributed to this project, he maintained there was also a significant level of private sector support as well as self-financing involved.

Councillor Wilkinson read a motion into the record calling on the Congress Centre and the City to work together to identify potential sources of revenue from the Centre to repay the City’s $40M investment in the project. She submitted that a series of alternative could be explored, which would help members of Council justify this contribution to municipal taxpayers. She wondered if the delegation could comment on it.

Mr. Durrell indicated he had no great difficulty with the motion as he felt it was a reasonable request.

Responding to a question from Councillor Bloess with respect to the potential incremental tax revenue from hotel expansion and/or the construction of new hotels, Mr. Kelly indicated there was already considerable interest because of the OCC expansion. He believed a hotel deal would likely be accomplished before the new Centre opened its doors with construction running concurrently towards the latter part of the OCC construction project and a new hotel opening its doors approximately one year afterwards.

Based on this response, Councillor Bloess noted there was not a pure link, as suggested in the report and the presentations. There would be some lag time before the City would start seeing incremental increases in revenues.

Responding to a series of questions from Councillor Bloess, Mr. Kelly and Mr. Durrell re-iterated information provided previously with respect to current market share with the existing facility versus potential market share with the new proposed facility and the OCC’s requirement to come up with enough funds to over its own needs in terms of lifecycle maintenance and debt servicing costs in order for the project to go ahead. In addition, Mr. Durrell assured Committee that the OCC was a Provincial Crown agency and that therefore, the City would not be responsible for any of its operating costs.

Responding to a question from Councillor Bloess with respect to the transit linkages, Ms. N. Schepers, Deputy City Manager of Planning, Transit and the Environment, indicated it was far to early to know where there might be a connection and what its costs might be. Although she could not provide costing for a station on the Mackenzie King Bridge, she believed it would be in excess of $10M to $15M.

Responding to a question from Councillor Desroches with respect to the total costs to the City for this project, Mr. Mackay re-iterated that the $40M capital contribution would result in a $2.9M annual debt servicing cost. He advised that costs had not been quantified in terms of additional municipal services to the Centre.

In reply to a further question from the Councillor, Ms. S. Simulik, City Treasurer, indicated Council would not be displacing any projects. She indicated her understanding was that Council was looking to defer $15M worth of other capital works in order to make room for this project and that this was on top of what was already in the next three years’ capital budget.

Councillor Desroches wondered why the OCC could not simply renovate its existing facility or have a project on a more economical scale. Mr. Durrell indicated the board had carefully reviewed and considered the possibility of renovating the current facility. However, the existing site had fallen into such a state of disrepair that in the end, the Board felt it made more sense, from a financial perspective and in terms of a construction timetable, to demolish and rebuild.

Adding to this, Mr. Kelly advised that the previous model, which sought to incorporate the existing facility, ended up being a vertical model, more than five floors in height and convention planners advised that they generally preferred horizontal space, which the current model provided.

Councillor Desroches asked for a further comment on the notion of overall benefits to the City, not just the downtown. Mr. Bird indicated that in the short-term, there would be a net benefit of approximately 6,000 jobs over the three years of construction and in the long-term, the new Centre would then generate approximately 3,800 jobs across the hotel, restaurant, transportation and support services industries. He noted that OCC representatives were working with the Labour Council on an initiative to use this project as a great example of their work, which would tie in to the Algonquin College project. Furthermore, based on the OCC’s work with the tourism industry, convention organizers and marketing groups, he submitted that the new convention centre would bring new revenues to this region of approximately $150M to $200M per year. He then discussed the visual appeal of the proposed design, noting it would make the area more friendly and enhance the entry into Ottawa.

Responding to a question from Councillor Desroches with respect to the impact of the Canadian dollar on the OCC’s projections, Mr. Kelly indicated the decline in American tourism to Canada had been widespread over the last five years. Therefore, he submitted that it had nothing to do with the strength of the dollar. In any event, he maintained that, although the OCC would be able to bring in more business from the United States and Europe, its primary market would continue to be Canada.

Councillor Deans noted the current proposal was a vast improvement over the previous version. She believed all members of Council would agree on its value and be very happy to see it move forward. However, she felt the debate came down to a question of who paid for what and whether it was reasonable to ask the municipality for an additional $15M over its previous $25M commitment. Based on a $40M contribution and the corresponding $2.9M annual debt servicing cost over 25 years, she surmised that the cost to the City would actually be close to $75M. Mr. Kirkpatrick confirmed that this was correct, if one ignored the time value of money. However, he submitted this would be discounted by the time value of $40M over those 25 years.

Mr. Bird submitted that the $40M included money for the transitway, which would tie in, and approximately $3.5M to $4M in development and building permit fees, which would be factored back in. He estimated the project would move to a proposal call in the spring, which would call for constructors along with a finance team and the finalization of the design and architecture. This would wrap up the need for short-term financing through 2011/2012. Beyond that, mortgaging would be put in place. Therefore, he suggested the figures referenced by the City Manager pertained to the post-construction mortgage payments.

Councillor Deans maintained she was looking at the total investment from Ottawa property taxpayers to the new Congress Centre. She noted that the Federal government was contributing $50M but that, presumably it would be taken from their surplus so they would not be debt-financing. She stressed that because the City did not have cash to contribute to the project, its portion would end up costing more. The Councillor referenced an e-mail she received from a constituent with respect to a convention center project in the City of Vancouver, noting that in there that case, the Province was contributing 60% of the full cost, the Federal government 25% and the tourism authority was picking up 9% of the costs. She noted that in Ottawa, the tourism industry was being asked to contribute some operational dollars but they were not being asked to contribute to the capital costs of the project. She referenced the fact that the Provincial and Federal governments would get full returns on their investments through taxation in three to five years, the suggestion that the City would get an uplifting of taxes from abutting commercial properties and the cost to the City of development in the downtown area in terms of corresponding infrastructure, transit and service needs and she asked that someone present a good argument as to why the City should make this level of contribution when it seemed out of balance with the overall benefit.

Mr. Durrell felt it came down to whether Council viewed this as an investment or as an expenditure. With respect to the true cost of the contribution being close to $75M, he submitted he could argue that the City got over $500M in property taxes over the same period of time, excluding any form of inflation. He indicated that, if an investment counseller asked him to invest $75M today for a $500M return on his investment in 25 years, he would view it as a no-brainer. He re-iterated that members of Council either viewed this as a positive project for the downtown and an investment into the City’s future, or they did not. He maintained that this was a good investment.

Councillor Deans re-iterated that for her, this came down to a balance with respect to the contributions of the various stakeholders and the returns to those same stakeholders. She referenced the Vancouver model, where the Province was paying a larger proportion of the project costs, the fact that the upper tier governments had much more ability to pay, and she wondered why the OCC Board had not asked the Provincial and Federal governments to contributed a larger portion.

Mr. Durrell felt this was a fair argument. However, he suggested, based on his municipal experience, that unless a municipality invested in its infrastructure, it would find itself in an ever increasing downward spiral. He maintained that the real beneficiaries of this project would be the City of Ottawa and its citizens.

Councillor Deans wondered if the delegation would support a municipal campaign to getting 1% of the GST, which would be invested in local infrastructure. Mr. Durrell indicated he felt that had always been a very good issue and that, personally, he would support it.

Responding to a final question from Councillor Deans, Mr. Durrell assured Committee that, because the OCC was a Provincial Crown corporation, should there be any cost overruns associated with this project or the Centre’s operations, the Province would be responsible. No additional money would be requested from the City.

Councillor Chiarelli acknowledged the financial arguments made with respect to the proportions being contributed by the three levels of governments versus each one’s ability to pay. However, he maintained the issue came down to City Council’s responsibility to fulfill its economic development mandate. He asked Mr. Durrell, based on his own municipal experience, to comment on how a municipality’s economic development responsibilities got catapulted to the forefront during times of recession and how important such decisions became in a slightly different economic context. Mr. Durrell re-iterated that when a municipality stopped investing in infrastructure, it began a downward spiral. He discussed the different ways in which municipalities could generate additional revenues; increased taxes, increased user fees, and increased new opportunities. He maintained this was a new opportunity, which would benefit the City for years to come.

Responding to a question from Councillor Hume, Mr. Durrell indicated all funding for this project was conditional on a number of aspects falling into place. He confirmed that if the City did not approve the requested $40M, the project would not go forward because the Federal funding was conditional on each of the three levels of government contributing its share. .

Mayor O’Brien asked the City Manager to explain staff’s reasons for support this project.

Mr. Kirkpatrick confirmed staff was recommending Committee and Council approve this proposal. He acknowledged that the Provincial and Federal governments would get more return on their investment than the City would. He noted Councillor Deans’ reference to the Vancouver situation and the fact that the Province of British Columbia was contributing a greater portion of their project costs. He maintained this was not the situation in Ontario, nor did he believe it would change. He explained that this was a tri-level funding arrangement and that the municipality’s contribution was necessary in order for the project to move forward. Beyond that, he discussed the business case, which he submitted was quantitative as well as qualitative. On the quantitative side, he indicated he had reviewed the Market Research study and that he believed there would be enough increase in incremental tax revenues to justify the investment. On the qualitative side, he discussed the Centre’s design and the fact that it would change the esthetics of this part of the downtown, which he believed would have an impact on a lot of the social issues that were of concern to Council. He believed this project would have a major impact on the City’s livability and on the way people experienced it.

Councillor Deans inquired as to the funding arrangement for the Toronto Convention Centre. Neither Mr. Kirkpatrick nor Mr. Mackay had that information on hand.

Councillor Deans noted the number of public delegations registered to speak on this item and the fact that Committee would not likely vote on the recommendations for some time. She asked that the information be provided prior to Committee voting on the item.

At this juncture, Committee heard from the following public delegations.

Ms. Gail Logan, President of the Ottawa Chamber of Commerce, suggested a new Congress Centre would put Ottawa on the map as an international convention destination and the City and the community would reap the rewards for years to come. Furthermore, she believed this project fully met the criteria for smart economic development. She indicated the Chamber was proud to endorse the project. Although she acknowledged the City’s budgetary difficulties, she encouraged Committee and Council to approve the contribution. She submitted that Council had to look at the long term and what this investment would mean for Ottawa. She felt this was a solid capital project and that it would produce a myriad of benefits for the City and the community at large. A copy of Ms. Logan’s written submission is held on file with the City Clerk.

Dick Brown and John Jarvis of the Ottawa Gatineau Hotel Association (OGHA), representing 45 members in Ottawa and 7 in Gatineau, expressed agreement with respect to cities being this country’s economic generators. Mr. Jarvis noted that tourism was a major economic generator in Ottawa because it brought new money into the City. He discussed the many and variety business sectors impacted by tourism, noting that these were all extremely affected by the Toronto SARS incident. He submitted that, not only did the tourism sector create jobs, it also created social dynamism. From an economic point of view, he believed Ottawa was lacking one important piece in its infrastructure; an adequate sized convention centre. Although this project would result in a two and a half year period without the ability to host large conventions, the OGHA recognized the long-term benefits to the industry, its partners and the City. He advised that, through a destination marketing fee (DMF) collected by 41 of its members, the OGHA funded all of Ottawa Tourism’s operating expenses, which was required to sell Ottawa as a destination for tourism and conventions. In addition, of the more than $6M in marketing investments made with DMF funds, more than $1.3M was dedicated to marketing for conventions and meetings in Canada, the United States and Europe, with the Ottawa Congress Centre being the centerpiece for these marketing efforts. Furthermore, he reported that hotels hosting delegates had agreed to contribute funds to the convention incentive fund; a $500,000 fund used by Ottawa Tourism and the Congress Centre to attract major meetings and conventions to the City. In closing, he indicated the OGHA and its Board had agreed that the OGHA would participate in a tourism industry work group to identify how the industry could generate an ancillary revenue stream for the redevelopment of the Ottawa Congress Centre. He encouraged Council to make the necessary investment to redevelop the Ottawa Congress Centre and, in so doing, help stimulate the economy and improve Ottawa’s downtown core.

Responding to a question from Councillor El-Chantiry with respect to whether or not the OGHA would support calling on the Province to amend the Ottawa Congress Centre Act to allow the City to receive some property tax revenue from the facility, Mr. Brown submitted this was beyond the purview of the hotel association. However, he indicated that personally, he would support any efforts to improve the City’s financial circumstances, not only with respect to the Congress Centre, but with respect to the distribution of revenues in general between the three levels of government.

In reply to a series of questions from Councillor Jellett, Mr. Brown confirmed that the OCC expansion would result in a 3% to 5% increase in the hotel occupancy rate. Although he had not done any calculations with respect to what this would represent in terms of dollars, nor did he have figures on hand with respect to total hotel revenues, he advised that this year, the OGHA generated $7M in DMF revenue, which represented about 3% of their total room revenues.

Based on these figures, Councillor Jellett estimated the increased hotel occupancy rate would generate an additional $7M to $10M in revenues for the hotels and he wondered if some of it could be contributed to the capital fund.

Mr. Brown noted that each of the new hotels would then be contributing to City property taxes as well as their own financing and mortgages.

Councillor Jellett discounted the notion of “new” hotels because there were no assurances that there would be new hotels. With the current hotels generating increased revenues as a result of a high occupancy rate, he wondered why the hoteliers in this City could not put some money forward to help build the OCC. Mr. Brown indicated he did not know of anywhere where the private sector hotels had invested in a publicly owned piece of infrastructure. He did not know how it would be done. He noted that hotels in Ottawa, like in most centres, were owned by individuals and corporations, most of whom were not headquartered in Ottawa. Therefore, he submitted that he could contemplate them treating Ottawa differently and finding a way, as private businesses, to contribute to this piece of infrastructure.

Responding to a question from Councillor Jellett with respect to the tourism industry in Vancouver contributing 9% towards the cost of that city’s convention center, Mr. Brown indicated he did not know the details of the arrangement. However, he noted that the Vancouver tourism and convention center had received an enormous influx of money associated with the 2010 Olympics and that their conference center expansion was part of that. Furthermore, he remarked that in British Columbia, the tourism and hotel industries operated differently because of a hotel room tax and that there was no such provision in Ontario.

In response to further questions from Councillor Jellett, Mr. Brown confirmed that the OGHA had implemented a voluntary marketing fee. He indicated that to convince hotels to add 3% to their room rates and then to send that off to a third party in good faith, required that the OGHA come up with very clear and specific terms in those 41 individual contracts. He explained the terms of those contracts, which required that all the money must be invested in destination marketing. Therefore, it could not be used for capital or operation costs of the OCC or any other piece of infrastructure. Furthermore, he advised the agreements also specified that, in the event there was an increase in taxes on hotels, the program would die. He maintained this would deprive the OGHA of the $7M to $8M a year now used to enable Ottawa to compete in terms of attracting visitors and conventions.

Councillor Chiarelli indicated he had talked about introduction a motion to deal with a hotel room tax, which had been reported in the media. However, he advised that he would not be introduction that motion now, though he may raise it at another time. He recognized that there were many discussions to be had around this issues and many details to be addressed and he wondered if the OGHA would participate in such discussion when the time came. Mr. Brown and Mr. Jarvis responded affirmatively.

Daniel Laliberté, Chair of Ottawa Tourism expressed support for the OCC expansion, submitting that for too long, Ottawa had been losing out on opportunities to hold large meetings and conventions. He discussed the wealth of infrastructure already in place in Ottawa in terms of museums, parks, the Rideau Canal and other attractions. However, he maintained the convention center was simply too small and it had an awkward lay-out, an unwelcoming façade and a dated design. He indicated Ottawa Tourism did its best with what it had, noting that last year, they had been able to book 73,000 room nights for future business, representing an economic impact of $50M. He urged Committee members to imagine all the benefits to the community, if Ottawa had an expanded conference center. He reported that Toronto, Montreal, Whistler, Winnipeg and Edmonton all had expanded conference centers and that projects were underway to expand the centers in Victoria and Vancouver. He noted even Quebec and Calgary, which were smaller cities than Ottawa, had larger conference centers than the OCC. He indicated there were currently more than 65 projects underway for new or expanded conference centers across North America and Canada, representing 20 million square feet of new exhibit and convention space within the next five years. He maintained that if the City of Ottawa did nothing, it would lose out. He re-iterated that the OGHA, through a voluntary marketing fee, was raising approximately $8M annually to market Ottawa as a tourist destination. He noted this may seem like a lot, however he advised that in comparison, Quebec City spent $12M, Toronto spent over $25M, Calgary spent over $10M, Vancouver spent over $15M and Montreal spent close to $30M annually for the same purpose. Furthermore, Mr. Laliberté reminded Committee that a few years ago, the City stopped contribution $2M annually to Ottawa Tourism operations. He indicated Ottawa was the only large City in Canada not contributing directly to promote tourism and he asked that Council contribute the money saved from Ottawa Tourism operations to finance its portion of the OCC expansion.

Noel Buckley, President and CEO of Ottawa Tourism indicated the enhance OCC would be one of the key elements of success for the local tourism industry. He suggested Ottawa Tourism’s Meetings and Convention department had the contacts and the expertise to spread the word about our this new facility to pre-meeting planners and convention organizers around the world. He re-iterated that many contacts had been patiently awaiting a firm announcement so they could explore hosting their next meetings in Ottawa. He explained that the typical planning process for conferences was literally years ahead of the actual conference date. Therefore, Ottawa could begin selling the new space immediately. He submitted that this pre-booked business would provide a base of business from which the entire city would benefit. He submitted that, as a G8 capital city, and with the right facility, Ottawa would be a natural location for groups to gather. He referenced the increasing air links, the availability of a wide range of accommodation, the research facilities and universities, the bilingualism and multi-culturalism, the first rate attractions and the compact downtown core, and he maintained that Ottawa had everything to offer. The only thing missing was a conference center that reflected the needs of modern meetings and conventions.

Paul Benoit, President of the Ottawa International Airport Authority (OIAA), stated his organization’s strong support for the Ottawa’s Congress Centre’s $15 million funding request from the City. He advised that the direct economic impact of the Ottawa International Airport was in excess of $1 billion a year. Less than 5 years ago, the old airport was considered an impediment to growth but that the region was currently served by a state-of-the-art terminal, which rivaled airports worldwide and continued to grow significantly. He briefly described some of the ways in which the airport continued to grow, which he believed were signs of the confidence in Ottawa as a destination. Similarly, he submitted that for many years, the OCC had been an impediment to this City’s economic growth. Ottawa had sat back and watched as more and more of the lucrative meeting and convention market went to other Canadian cities. Like the previous speaker, he believed Ottawa had a lot to offer but that without a proper meeting and convention facility, it would not achieve its potential. Having visited cities around the world and having seen many convention facilities, he submitted there was an untapped market and that Ottawa was missing the boat. He recalled that when the two national political parties want to hold their conventions, they by-passed Ottawa because its facilities were not in the big league. He maintained that with a fully developed destination product, including a state of the art convention facility, Ottawa would be successful in attracting new business and new visitors from around the world. Mr. Benoit indicated the OIAA’s Board of Directors had recently passed a motion to participate in discussions related to the development of an industry-led revenue stream, which would be used to service the debt the OCC would need to take on for this project and to fund capital reserves to cover lifecycle costs on an on-going basis. He suggested the City’s investment in this redevelopment was smart long time strategy and that it was an opportunity for this Council to show the leadership needed to bring the project to life.

Councillor Hume referenced the parallels Mr. Benoit had drawn between the airport and the OCC and he asked how the airport expansion had been funded. Mr. Benoit indicated it had been funded through an airport improvement fee.

Responding to a follow-up question from Councillor Hume with respect to the possibility of a similar funding mechanism for the OCC expansion, Mr. Benoit cautioned that conventions were extremely price sensitive and that if Ottawa imposed a fee on convention delegates and a competing city did not, the business would go to the other city.

April Taylor, President of Taylor & Associates Marketing Planners, stressed that Ottawa needed a new convention center. She believed the team put in place to advance this project was very professional and very thorough. Their plans dealt with all the requirements for the number of associations, large corporate conventions, political conferences that currently could not meet in Ottawa because of lack of space. She noted most conferences were substantially bigger than they were 25 years ago and that Ottawa had been consistently losing market potential due to its inability to addressed the industry’s requirements. She maintained that Ottawa needed to be able to operate as a truly world class capital city and showcase its resources and its facilities. She acknowledged the City’s budgetary difficulties. However, she submitted this was a situation where there would be a return on the investment. She indicated convention planners had been waiting for the opportunity to finally meet in Ottawa and she felt it was about time Ottawa acted like a capital city.

David Jeanes suggested the new Congress Centre would fill a large gap between the National Arts Centre and the Conference Centre. He discussed the surrounding area’s history and architecture and submitted that the building’s modern style would complement the area’s diversity, noting that it would also be prominent when viewed from Sparks Street, Slater at Elgin and Festival Plaza at City Hall. He felt the Congress Centre was in an ideal setting for tourism, hotels and access to downtown commercial facilities. He noted it would constitute a new major urban facility, as defined in the City’s Official Plan, which required that such facilities be at rapid transit stations. He then discussed the new facility’s links with the Mackenzie King transit station and any future bus tunnel through downtown. He urged the City and the Congress Centre to work together to ensure that the construction would not preclude a downtown tunnel and that a station could be constructed at the Congress Centre, as required by the Official Plan. In closing, he indicated he would look for a strong focus on the Congress Centre project from the upcoming transit tunnel environmental assessment (EA). A copy of Mr. Jeanes’ written submission is held on file with the City Clerk.

Darlene Kelly-Stewart, Meeting Professionals International, urged Committee and Council to approve the funds required to bring the Ottawa Congress Centre into the 21^st Century. She indicated she made this request on behalf of the nearly 300 meeting planners and industry suppliers who made up her organization’s membership in the Ottawa area and on behalf of the tens of thousands of Ottawa residents who would be part of the economic benefits flowing from the Congress Centre expansion. She maintained the expansion project was long overdue and it came at a time when Ottawa was falling off the map as a serious conference destination. She reported that convention delegates spent a lot more per capita than the average visitor. They visited local restaurants and shops, museums and other attractions. They often arrived with their families and stayd for a few days after their meetings. She maintained all of those benefits would come back to the local economy. She felt the OCC was one of the best investments Council could make to keep the local economy strong and sustainable for years to come. On behalf of her organization, her business colleagues, her neighbours and her community, Ms. Kelly-Stewart urged Committee and Council to be part of this project.

Richard Hayter, Construction and Building Trades Council, suggested the Ottawa Congress Centre redevelopment project would be giving back to the community long before its doors officially re-opened on April 2011. He noted the construction of this unique facility would provide a wealth of economic benefits for the local labour market. Through 3 years of construction, more 2800 workers would be involved in the project, creating opportunities for 14 trades, comprising 66 job activities. He advised that, as one of North America’s safest and most beautiful destinations, Ottawa’s building trades had been unable to attract, host and/or invite their international conventions to Ottawa. He reported that a motion was being moved in Texas to host an ironworkers’ conference in Ottawa in 2012 and that the local building and construction trades looked forward to proudly displaying this new high-tech facility, to be built by hard-tech professionals. He noted that this multi-year construction project would provide safe, stable jobs for hundreds of community trades persons, who would in turn use their paychecks to stimulate the local economy. He submitted that for every $1M invested in non-residential construction, 15 to 20 person years of work were generated, replacing some of the work lost in the cancellation of the light rail transit system project. Mr. Hayter refereced Council’s recent decision to support an expansion project at Algonquin College and he suggested that such construction projects such as the OCC expansion represented direct and tangible ways in which the community could demonstrate its commitment to apprenticeship training. In closing, he encouraged Committee and Council to move forward on the OCC expansion project.

Responding to questions from Councillor McRae, Mr. Hayter explained that his organization’s Secretary-Treasurer was attending a conference in Texas and, coinciding with his own presentation before Committee, his colleague was introducing a motion to host a large international conference in Ottawa in 2012, which would bring approximately 4,800 delegates to this City.

Speaking on behalf of Council’s representatives on the Ottawa Congress Centre Board, Councillor Bédard attested to the due diligence carried out by the existing board. He indicated when he arrived on the OCC Board, the whole concept was simply to keep the existing building and build up from there. In discussing the proposal, it became fairly obvious that this did not make much sense. He advised that a consulting firm was hired to look at various options. He attested that they had looked at every option and he congratulated the consultant and the Board for really looking into the matter and doing some hard number crunching, not only with respect to the construction, but also with respect to long-term operations and lifecycle maintenance. As a result, the Councillor indicated he was very confident about what was being presented. He listed some of the many attractions drawing visitors to Ottawa and he stressed the need for an appropriate meeting and convention facility. Speaking to the question of whether or not Ottawa could afford to pay for this, Councillor Bédard submitted the City could not afford to not pay for it. He talked about efforts made to date to redevelop and revitalize the downtown area and he advised that, as a result of this project going forward, other projects were being planned and also moving forward. Therefore, he attested to the arguments made earlier and in the report with respect to incremental development and incremental tax revenues. He referenced the fact that this project would create jobs, noting some of the poorest members of the community would benefit. In closing, the Councillor encouraged his colleagues to look at this as a project for the future.

Councillor Wilkinson agreed that this was a strong economic development project for the City. However, she also recognized that Council had real difficulties in financing a lot of the things the City needed to do. Therefore, she expressed a desire to find some middle ground and advised that she would be moving a motion calling on the Congress Centre to work with the City to find ways of repaying the City’s investment. She indicated she did not want her motion to prevent the project from moving forward. However, she felt strongly that all possibilities should be explored to recover the City’s investment in this project.

Councillor Bloess felt the additional $15M being requested would give the City a sizable investment in its downtown; an investment that would pay off in terms of revenue flow. He referenced the $50M committed by each of the upper levels of government and the private sector contributions being made to the project and he indicated he believed this was the right thing to do.

Councillor Chiarelli referenced the City’s responsibilities with respect to economic development and the fact that, during difficult economic times, economic development decisions became particularly important. He suggested that at some point in time, this Council would be summed up in terms of the picture it painted during its four-year term. He noted the various elements coming together to make this project happen and he submitted that Council could not afford to pass up an opportunity to advance a project that would define the City’s economic development for the next 30 or 40 years. In closing, he urged his colleagues to rise to the occasion.

Responding to a question from Councillor Deans, Mr. Kirkpatrick advised that when the City Treasurer tabled the City’s Draft Budget on November 14, she provided a report identifying some strategic initiative capital projects, which had not been included in the budget. He indicated this project was on that list. He confirmed that the present report would rise to Council on November 28 and he explained that, based on the wording of the report recommendations, if Council approved the report, they would be approving a pre-commitment against the 2008 budget. He stated it was important to recall that this project, and several others on the aforementioned list, would qualify as legacy projects, as defined in Council’s Fiscal Framework policy. Therefore, funding for this project would not be competing for a portion of the $60M capital budget identified in the budget directions for strategic initiative capital over the next 3 years.

Councillor Deans expressed agreement with Councillor Wilkinson’s motion. She thought everyone believed this project should go forward. However, she maintained the issue came down to money and who paid what. She was of the opinion that the City was not getting as good a deal as the Provincial and Federal governments, which would have their investments returned in three to five years. She noted the City would have to debenture its contribution, which would end up costing more. Furthermore, she felt the returns on the City’s investment were not as clear. She agreed that this was a legacy project and would be of value to the City. However, she did not want that legacy to be one of debt. She remarked that by making their funding contingent on the City’s contribution, the Provincial and Federal governments had put the City in a difficult position. In closing, she indicated she was prepared to take the City Manager’s advice to move forward, but that she would also support Councillor Wilkinson’s motion in order to improve some of the return to the municipality.

Councillor El-Chantiry echoed many of the thoughts and concerns expressed by Councillor Deans and Wilkinson, discussed the on-going operating pressure this contribution would create for the City and indicated he would be moving a motion to request that the Ottawa Gatineau Hotel Association contribute $2M of their voluntary room charge to the City to cover a portion of the cost of servicing the debt incurred for the Congress Centre expansion project. The Councillor submitted that if this industry was going to be the biggest beneficiary of the expansion, it would be a good business move for them to contribute to help offset these costs. However, he indicated he did not wish to make this a condition of the project moving forward.

Responding to a question from Mayor O’Brien, Councillor El-Chantiry indicated he would submit his motion as a Notice of Motion.

Mayor O’Brien referenced the motion submitted by Councillor Wilkinson. In response to questions from members with respect to whether or not the motion would result in the City’s funding being conditional, Mr. R. O’Connor, City Solicitor, indicated her read the motion as being non-conditional.

Councillor Deans followed-up on her request for information with respect to the funding model for the Toronto conference center. Mr. Mackay confirmed that he had asked for the information but that he had not yet received a response from his office.

Mayor O’Brien suggested that Committee move forward with the vote and he asked that the information be provided prior to the item rising to Council.

At this juncture, Committee voted on the motion submitted by Councillor Wilkinson.

Moved by Councillor M. Wilkinson

That the Ottawa Congress Centre work with the City of Ottawa to identify potential sources of revenue from the Centre that would repay the $40M investment by the City for the capital construction of the Centre – such sources of revenue could include:

1. A portion of any revenues over expenses of the Centre;

2. Having the Province provide grants in lieu of taxes for the Centre until the grant is repaid, including any interest costs incurred by the City;

3. Negotiating a share of GST and/or PST paid for services at the Centre until the grant is repaid;

4. Other possibilities.

CARRIED

Committee then voted on and approved the report as amended.

That the Corporate Services and Economic Development Committee recommend Council:

1. Support the Ottawa Congress Centre (OCC) planned reconstruction and expansion as a Strategic Priority Initiative and reconfirm City Council's commitment as per Motion No. 57/4 (Document 1) to provide $25 million for the capital construction costs to be financed by a debenture in that amount;

2. Contribute an additional $15 million as a Strategic Priority Initiative for the OCC's planned reconstruction and expansion and authorize debt financing in the same amount, subject to Council's deliberations of the 2008 budget;

c. The City receiving a copy of the fully executed funding agreement between the OCC and the Government of Ontario detailing and committing its additional $20 million contribution to the project.

d. The City receiving a copy of the fully executed funding agreement between the OCC and the Federal Government detailing and committing its $50 million contribution to the project.

i. That the OCC design meets the requirements of the "Downtown Ottawa Urban Design Strategy".

m. The OCC agreeing to direct 1.5% of the final construction budget (currently estimated at $159 million) for the OCC project towards implementing the City's Transit Oriented Development Guidelines. Such funding will be used to integrate the downtown transit network, into the Congress Centre project and improve transit services to and from the building.

n. The OCC agree that the release of the City's funding of $40 million for the project be conditional on all required approvals and/or permits under the Planning Act and Building Code Act for the projects development have been obtained including any required approvals from the Provincial and Federal Governments.

5. That the Ottawa Congress Centre work with the City of Ottawa to identify potential sources of revenue from the Centre that would repay the $40 million dollar investment by the City for the capital construction of the Centre – such sources of revenue could include:

a) a portion of any revenues over expenses of the Centre;

b) having the Province provide grants in lieu of taxes for the Centre until the grant is repaid, including any interest costs incurred by the City;

c) negotiating a share of G.S.T. and/or P.S.T. paid for services at the Centre until the grant is repaid;

d) other possibilities; and

6. That the Corporate Services and Economic Development Committee receive a report on progress made on these initiatives on at least an annual basis.

CARRIED as amended

YEAS (10): R. Bloess, R. Chiarelli, D. Deans, S. Desroches, E. El-Chantiry, P. Hume, R. Jellett, M. McRae, M. Wilkinson, Mayor O’Brien

NAYS (0):