Plans for a massive $4 billion development in Ottawa’s LeBreton Flats including a new downtown arena for the Ottawa Senators, coupled with condo, office and retail structures, have ground to a halt as Senators owner Eugene Melynk has moved the simmering partnership dispute to the courts.
Melynk’s and Trinity Developments president John Ruddy’s organizations had formed a joint venture, RendezVous LeBreton, to build the complex on land owned by the federal government’s National Capital Commission (NCC), winning a 2015 competition that originally had four bidders.
However, partnership problems developed when Melynk learned Ruddy’s organization was developing the 900 Albert St. project on 1.2 hectares directly adjacent to the LeBreton Flats site.
At the time the 2015 deal between the Senators’ organization and Ruddy’s Trinity Developments was under-way, Melynk was fighting for his life with a liver transplant operation. As he recovered his health, he began to sense that things weren’t right with the partnership agreement negotiated for his company, Capital Sports Management Inc. (CSMI), by key staff and consultants during his illness.
His concern: The 900 Albert project would suck the wind out of the market, resulting in a conflict of interest that would make the LeBreton project unsustainable and unviable.
The dispute was kept behind closed doors as the NCC and City of Ottawa pushed the partners to work out their issues and proceed with the project.
Things broke down, apparently for good, on Nov. 23 when Melynk filed the bombshell lawsuit against his partners, with a statement of claim that the National Post describes as being “filled with remarkable allegations of political interference, conflict of interest and betrayal.” Ruddy has strongly denied the allegations, which haven’t been tested in court.
Ruddy’s 900 Albert St. project includes three towers on a retail podium with a projected density of 17 million sq. ft.
CSMI also learned that Trinity had sold off part of its interest in 900 Albert with two new partners, including InterRent Real Estate Investment Trust, which took a one-third interest in the project for $14.2 million in August, 2017, the lawsuit asserted. “This represented an approximately 30 per cent increase on the previous value of the land,” the suit said.
At a contentious NCC meeting on Sept. 29, 2017, and after seeing artist renderings of 900 Albert, Marco Zanetti, the NCC’s lead negotiator and real estate specialist, said Trinity’s project will “take the wind out of the sails of LeBreton,” lawsuit asserted.
In another meeting with the NCC on Jan. 15, 2018, CSMI warned the government agency in a prepared statement that CSMI was reassessing its involvement because 900 Albert’s “size and scope.”
However, the lawsuit asserts the NCC pushed the parties to push forward. “NCC turned a blind eye to CSMI’s concerns,” the suit asserts.
Both CSMI and Trinity commissioned studies to back their positions. An April 2018 report prepared by PriceWaterhouseCoopers prepared for CSMI questioned the ability of the region to support both projects, saying the developments would “directly complete with one another.”
Meanwhile, Trinity presented a far more optimistic market study from Urbanation, saying that the city was rebounding.
Officially, the NCC is clinging to a faint hope that the project can still move forward, giving the parties until January 2019 to come up with a partnership agreement.
However, now that Melynk has filed his lawsuit, that appears to be a pipe-dream.
“As an organization, we just don’t have the confidence and the comfort that we would actually be building a viable project for the city at LeBreton, instead of a white elephant,” he told the National Post.
Ruddy provided an equally forceful statement.
“Trinity strongly denies the allegation in CSMI’s lawsuit and intends to vigorously defend the claim. For over 30 years, I have sought to make a contribution to the communities in which Trinity operates, and in particular my hometown of Ottawa. I will always find ways to build Ottawa up and continue to make a contribution to our great city.”
What will happen now?
According to SportsNet, the NHL isn’t happy with the stadium situation in Ottawa, but believes the Senators still have a future in the city, regardless of what is happening at LeBreton Flats.
“People wonder, ‘Is this going to be the end of the team?” said Elliotte Friedman on Hockey Night in Canada. “They’re trying to find a way to make this work, but I just think that the league and Senators are really unhappy because they felt they raised the issues a year ago.”
As for the NCC and Trinity, it is hard to see how the current LeBreton Flats vision can, at least in the immediate future, turn into reality as long as 900 Albert moves forward.
Possibly the second-place developer can enter the picture and complete the project.
“We’re wondering why it’s taking the National Capital Commission so long,” John Pierrre Poulin, president of Gatineau-based land development Devcore, said in January 2018.
“There’s a process in place and it should be respected. It’s a major development and the best should be done. It should not be that complicated.”
Poulin’s group, DCDLS, includes commercial developer Canderel; André Desmarais (of Power Corp.), Guy Laliberté (of Cirque du Soleil) and William Sinclair (formerly of JDS Uniphase) as core partners; and affiliates like the Ripley’s Aquarium company.
DevCore Group said in a statement that it remains ready to take over the project should the current agreement between the NCC and Melnyk’s group be terminated
“Our team has the expertise, experience and the financial resources that are necessary to deliver a world class project on behalf of the citizens of Ottawa and all Canadians, working together with the National Capital Commission and the City of Ottawa,” Poulin said in the statement.
“We do not believe Ottawa or Canada should be held hostage one day longer.”
The NCC said in a Nov. 22 statement:
The partners in RendezVous LeBreton Group (RLG), composed of Trinity Development Group Inc. (Trinity) and Capital Sports Management Inc. (CSMI), advised the National Capital Commission (NCC) on November 8th, 2018, of unresolved issues within their partnership. The NCC Board of Directors will proceed, in consultation with the Fairness Monitor, as well as with key stakeholders such as the Government of Canada and the City of Ottawa, with next steps either within the established solicitation process or within a new process at the January 2019 Board meeting.
In January 2018, the NCC Board of Directors approved the main business terms (term sheet) that will form part of a master development agreement (MDA), and directed staff to pursue the second stage of the solicitation process with RLG, the preferred proponent, on an exclusive basis.
The requirement to provide evidence that the partners had resolved their internal partnership issues was clearly set out by the NCC as an essential deliverable by November 1, 2018. At RLG’s request, the NCC extended the deadline to November 8, 2018, while the partners sought to reach a resolution. On November 8, 2018, Trinity and CSMI advised the NCC that they had not been able to resolve their internal partnership issues.
The NCC remains unequivocally committed to the redevelopment of LeBreton Flats to the highest standards of design, accessibility, sustainability and connectivity.