Rendez-Vous Lebreton Bid Fails

[AchtzehnBaby]

Can you please prove the first bolded portion of this post. Why on earth would they award the bid to someone who doesnt have the mental capacity to negotiate the deal? Thats insane.

The second bolded portion id love to see some proof of this other than your opinion.

It so incredibly obvious he simply has no capital to complete his portion of the deal.

The 900 Albert cop out is just an excuse. Was he going to sue every single other person that is building close to the site?.... You cant control all the real estate in Ottawa because you dont want any competition... Why isnt he making a big deal about Claridge building right beside it.

He is obviously just using 900 Albert as an out, anyone that understands real estate knows that his argument is absolutely ridiculous.

Not that I mean to side track your argument, but the 900 Albert street is the biggest issue.

I really can’t see how they allowed it to grow in size. The PWC report clearly states the effects of these towers.

It will all come out in the wash soon

 

[JD1]

How did it not make sense from his POV? Can you elaborate on why you think the owner would rather stay in Kanata and not downtown where both lines on the light rail meet? Other than obviously having no capital to contribute. Which doesnt mean its a bad deal for him it just means he isnt financially capable of completing what would be a very good deal for his hockey team in just about every way imaginable.

The value of the deal is what? 4 billion? How much margin is there on the deal? Split the margin in half. Build a 600M rink, i bet 1/2 the margin amortized over 30 years of development doesn't cover the interest carrying charge on the arena debt.

If the margin is 15%, which based on my research it's not likely to be that high, then there is 600m in margin. Half of that is 300m. Over a 30 year development that is 10m a year. Over a 20 year development it is 15m a year. Neither funds that arena. And 900 albert certainly squeezes the margins.

You can argue that he should not have to finance the arena he should pay for it. If you could do that, if you had that kind of money, why would you? Unless you were a philanthropist you wouldn't.

Arenas like what we want aren't being built in small cities in north america 100% with private money. They just aren't because you can't come up with a business model where it makes sense.

I don't wish to get into the debate about public funding either. I'm not sure what i think about it either way. Regardless of what i think about it on principal, i don't think it gets built without some significant subsidy / event surcharge

 

[Micklebot]

Not saying that it is beyond Watson to railroad EM into the deal for political reasons.

But at the same time...Watson didn't hire Leeder. Nobody forced the organisation to the table.

If it was a bad deal from the beginning then you can understand that everyone involved would be a little frustrated having wasted two years. Maybe the city was too aggressive, Ruddy too optimistic, but the sens also share blame, and Melnyk has to wear that. Millions of dollars were wasted and i'm sure local partners that lost out on other work while trying to put this proposal together are not overly sympathetic to EM's message of "sorry, I was sick". Not making light of his illness...but then he should have postponed the negotiations.

The problem is that by only raising concerns and not walking away earlier, he gave everyone the impression that while not perfect, maybe it could still work, and now people are frustrated that it couldn't, because the impressions was clearly given that it could.

At the end of the day, keeping discussions open in hopes of figuring something out that works for all parties can look/sound the exact same as stringing people along in hopes they dramatically improve their offer.

At the end of the day, there had to be a "right" risk profile for Melnyk, otherwise they never would have even explored the deal in the first place. We've seen a couple public offers by Melnyk to salvage the deal: free rent and he pays maintenance fees for the arena while presumable keeping all arena related profits was one. To me, that sounds like a pretty low risk profile. To me, it sounded like the only arena related profit he was willing to forgo was the salvage value once it passed it's lifespan.

I do think there were some unforeseen (to him at the very least) changes in the risk profile of the project; they initially wanted brownfield program to cover some costs, and 900 Albert's changes likely at the very least delayed when he would see revenue from the Lebreton projects non-arena revenue streams. It's also possible his health scare changed his willingness to accept as much risk. Then there's the boycotting, I'm sure that didn't help either.

In hindsight, it would have been better for all involved to cut bait earlier.

 

[JD1]

Can you please prove the first bolded portion of this post. Why on earth would they award the bid to someone who doesnt have the mental capacity to negotiate the deal? Thats insane.

The second bolded portion id love to see some proof of this other than your opinion.

It so incredibly obvious he simply has no capital to complete his portion of the deal.

The 900 Albert cop out is just an excuse. Was he going to sue every single other person that is building close to the site?.... You cant control all the real estate in Ottawa because you dont want any competition... Why isnt he making a big deal about Claridge building right beside it.

He is obviously just using 900 Albert as an out, anyone that understands real estate knows that his argument is absolutely ridiculous.

Bert the man was in hospital for months. He was on his death bed. Days away from death. Then a long recovery process. He wasn't involved when the deal was put together in 2015, he's said so himself. Google the timelines of the deal, when it was submitted, how long it would take to prepare a proposal like that, then google liver transplant surgery and when he had it.

The seconded bolded piece is quite factual. Its been reported on extensively.

You can believe that it didn't move forward because he didn't have the money if you like. I believe the deal didn't make sense.

I've posted why i don't think it makes sense. How about you start with some deal parameters: 4B in development, 50/50 profit split, 600 M arena. See if you can put the numbers together to make sense.

 

[supsens]

The value of the deal is what? 4 billion? How much margin is there on the deal? Split the margin in half. Build a 600M rink, i bet 1/2 the margin amortized over 30 years of development doesn't cover the interest carrying charge on the arena debt.

If the margin is 15%, which based on my research it's not likely to be that high, then there is 600m in margin. Half of that is 300m. Over a 30 year development that is 10m a year. Over a 20 year development it is 15m a year. Neither funds that arena. And 900 albert certainly squeezes the margins.

You can argue that he should not have to finance the arena he should pay for it. If you could do that, if you had that kind of money, why would you? Unless you were a philanthropist you wouldn't.

Arenas like what we want aren't being built in small cities in north america 100% with private money. They just aren't because you can't come up with a business model where it makes sense.

I don't wish to get into the debate about public funding either. I'm not sure what i think about it either way. Regardless of what i think about it on principal, i don't think it gets built without some significant subsidy / event surcharge

And I can't imagine what it would do to the value of that old barn sitting empty in Kanata. That would be a headache itself.

Edit.
Rich people problems.
Imagine going from Billionaire to bankrupt building yourself a 'better' rink.

 

[Micklebot]

And I can't imagine what it would do to the value of that old barn sitting empty in Kanata. That would be a headache itself.

Edit.
Rich people problems.
Imagine going from Billionaire to bankrupt building yourself a 'better' rink.

They'd likely sell it to a developer looking to convert it into a mall or something. Maybe Walmart needs a new distribution center or something. While it may not have the same value as if it were part of a sale of the team, I'm sure there would still be lots of opportunity to offload it and all the surrounding property they have at a tidy sum.

there's 100 acres I believe, and when Firestone wrote about why the CTC is where it is, he mentioned land in the area was trading for 300 to 550k an acre. That's 30 to 55 mil based on his numbers from 4 years ago.

 

[Take a Bath Son]

the Sens participation in a potential Lebreton deal was confirmed in late 2014. the winner of that deal was announced in 2016. Melnyk spent most of 2015 out of commission. Effectively without the mental capacity to negotiate a deal of that magnitude when it was negotiated.

long after that bid was submitted came 900 albert announcement into the public eye.

then came lebreton announced as a winner.

sure he was all lollipops in public and saying the right things, but when it came to signing term sheets and negotiating it was a problem from the get go. it was a problem from day 1.

ask yourself why?

the most logical reason is he's taking too much risk and it was risk he didn't have the mental capacity to agree to in the first place.

at the end of the day, if it was a sure fire big time money maker from the get go, it'd be a done deal.

look at the Lansdowne oseg deal and how it was portrayed as being so successful there was an article in the citizen about it losing money and the planned revenue streams haven't materialized

I don’t disagree that there could have been fundamental flaws from the start with the model and/or participants. I personally believe he was quite content in April 2016 though and this all comes down to when did he really sour on the deal, not if. Which is relevant to the lawsuits.

Cyril Leeder wasn’t fired until 8 months later in January 2017.

These facts and public comments will be an issue for him if he pursues litigation.

The article on Lansdowne was enlightening and demonstrates the complexity of making all this work. Pas facile

 

[JD1]

I don’t disagree that there could have been fundamental flaws from the start with the model and/or participants. I personally believe he was quite content in April 2016 though and this all comes down to when did he really sour on the deal, not if. Which is relevant to the lawsuits.

Cyril Leeder wasn’t fired until 8 months later in January 2017.

These facts and public comments will be an issue for him if he pursues litigation.

The article on Lansdowne was enlightening and demonstrates the complexity of making all this work. Pas facile

The litigation is going to be fascinating.

 

[Knave]

the Sens participation in a potential Lebreton deal was confirmed in late 2014. the winner of that deal was announced in 2016. Melnyk spent most of 2015 out of commission. Effectively without the mental capacity to negotiate a deal of that magnitude when it was negotiated.

You're actually trying to suggest they had the entire project negotiated and decided at that point wrt their bid? Laughable.

 

[coladin]

At the end of the day, there had to be a "right" risk profile for Melnyk, otherwise they never would have even explored the deal in the first place. We've seen a couple public offers by Melnyk to salvage the deal: free rent and he pays maintenance fees for the arena while presumable keeping all arena related profits was one. To me, that sounds like a pretty low risk profile. To me, it sounded like the only arena related profit he was willing to forgo was the salvage value once it passed it's lifespan.

I do think there were some unforeseen (to him at the very least) changes in the risk profile of the project; they initially wanted brownfield program to cover some costs, and 900 Albert's changes likely at the very least delayed when he would see revenue from the Lebreton projects non-arena revenue streams. It's also possible his health scare changed his willingness to accept as much risk. Then there's the boycotting, I'm sure that didn't help either.

In hindsight, it would have been better for all involved to cut bait earlier.

It would have been ideal to cut bait earlier but when Watson was approached about the deal falling apart he made sure Melnyk understood that pulling out “would be viewed as a direct attack on the mayor's political career and re-election effort."

So, there is that. As JD1 stated, the scope of the 900 Albert changed and it is alleged that Melnyk was not told until late 2017 when Ruddy showed him the plans. Doesn’t breed trust.

The city invested a ton into a losing venture for the RedBlacks and OSEG. While Lebreton is an NCC project, the city is involved regardless. Watson is an opportunist and the only thing he loves more than community breakfasts is : power.

I like Jim, and he is good at what he does, but sometimes he can blur certain lines that rub a lot of people the wrong way.

 

[Do Make Say Think]

The value of the deal is what? 4 billion? How much margin is there on the deal? Split the margin in half. Build a 600M rink, i bet 1/2 the margin amortized over 30 years of development doesn't cover the interest carrying charge on the arena debt.

If the margin is 15%, which based on my research it's not likely to be that high, then there is 600m in margin. Half of that is 300m. Over a 30 year development that is 10m a year. Over a 20 year development it is 15m a year. Neither funds that arena. And 900 albert certainly squeezes the margins.

You can argue that he should not have to finance the arena he should pay for it. If you could do that, if you had that kind of money, why would you? Unless you were a philanthropist you wouldn't.

Arenas like what we want aren't being built in small cities in north america 100% with private money. They just aren't because you can't come up with a business model where it makes sense.

I don't wish to get into the debate about public funding either. I'm not sure what i think about it either way. Regardless of what i think about it on principal, i don't think it gets built without some significant subsidy / event surcharge

So no why did he sign on to a partnership with Trinity, in 2014, with the express goal to build a new arena for the Senators?

 

[JD1]

You're actually trying to suggest they had the entire project negotiated and decided at that point wrt their bid? Laughable.

Have you ever been involved with complex government procurement?

Do you think the margin split agreement came before or after the bid went it?

 

[mysens]

It would have been ideal to cut bait earlier but when Watson was approached about the deal falling apart he made sure Melnyk understood that pulling out “would be viewed as a direct attack on the mayor's political career and re-election effort."

So, there is that. As JD1 stated, the scope of the 900 Albert changed and it is alleged that Melnyk was not told until late 2017 when Ruddy showed him the plans. Doesn’t breed trust.

The city invested a ton into a losing venture for the RedBlacks and OSEG. While Lebreton is an NCC project, the city is involved regardless. Watson is an opportunist and the only thing he loves more than community breakfasts is : power.

I like Jim, and he is good at what he does, but sometimes he can blur certain lines that rub a lot of people the wrong way.

We also need to keep in mind, that with the Landsdowne project that ruined businesses and families, regardless of the city which spear headed the project, they completely washed their hands when thngs fell apart with contractors losing their shirts. The business community feels that Jimbo should have stepped up and tried to make sure that OSEG and their GC's didn't squash the contractors who lost millions and millions and again ruining family buisness and legacies. Jim Watson is a pos. Not to be trusted. He was so involved with Landsdowne, and when $hit hit the fan and these honest contractors and families approached him to interject, he simply washed the blood off his hands.

 

[Micklebot]

The value of the deal is what? 4 billion? How much margin is there on the deal? Split the margin in half. Build a 600M rink, i bet 1/2 the margin amortized over 30 years of development doesn't cover the interest carrying charge on the arena debt.

If the margin is 15%, which based on my research it's not likely to be that high, then there is 600m in margin. Half of that is 300m. Over a 30 year development that is 10m a year. Over a 20 year development it is 15m a year. Neither funds that arena. And 900 albert certainly squeezes the margins.

You can argue that he should not have to finance the arena he should pay for it. If you could do that, if you had that kind of money, why would you? Unless you were a philanthropist you wouldn't.

Arenas like what we want aren't being built in small cities in north america 100% with private money. They just aren't because you can't come up with a business model where it makes sense.

I don't wish to get into the debate about public funding either. I'm not sure what i think about it either way. Regardless of what i think about it on principal, i don't think it gets built without some significant subsidy / event surcharge

So, I've seen 600 mil for the arena thrown around a lot, only time I recall seeing somebody involved in the bid putting down a number it was 500, I think Ruddy claimed in his lawsuit or in the media that Melnyk wanted a 500 mil arena for free. Not a big gap but still... Is 600 coming from the assumption it will be the same as the Edmonton arena? If so, that's likely high given that 600 mil was the entire project which included some non-arena stuff. The actual arena portion of the Edmonton project was around 480.

Speaking of Edmonton, they did get public money, about 50% of the arena was covered by public funds, more if you count a ticket surcharge, but tbh a ticket surcharge likely eats into what they can charge so I don't know how I'd categorize that. Katz paid or is paying about a third of the cost to build the arena (about 130 mil some of it in the form of rent) and Edmonton owns it and the land, so no salvage revenue when the place has used up it's lifecycle. Katz is also responsible for maintenance and operating costs

To compare that to Melnyk's ask when everything was going sideways: rent for free and he pays operation and maintenance cost while retaining operating revenue and naming rights, well lets just say on the surface Melnyk asked for a much better deal than Katz got to salvage the deal.

The original plan to have condo's ect fund the deal probably wouldn't have covered 66% of the cost to build the arena. But, Melnyk presumable would have owned the arena. I think the biggest issue would have been floating the initial costs until revenues from the rest of the project caught up; once the arena was built, he could get a cash infusion by selling off the CTC and land.

 

[Masked]

Can that neighbourhood handle the type of density that those buildings would bring?

That neighbourhood hasn't been built yet.

 

[bert]

Not that I mean to side track your argument, but the 900 Albert street is the biggest issue.

I really can’t see how they allowed it to grow in size. The PWC report clearly states the effects of these towers.

It will all come out in the wash soon

If 900 Albert is an issue so is all the development on Carling at Preston (6 more towers) so is all the development on Parkdale (3 more towers) so is all the development at 340 Queen (3 more towers) so is all the development that Claridge is completing at Lebreton.

Its a cop out to get out of the deal. Plain and simple. He doesnt have the money, the track record is overwhelming, look at every single decision that has been made by this organization over the last 4 years. They cut corners at every opportunity. Real estate is being developed everywhere directly linking to the development of Lebreton, to suggest that two towers at 900 Albert is the main reason while you dont hear boo about the 12 other buildings being built is hilarious to me. You all keep buying what this con man is saying its crazy, just look at all the facts.

 

[AchtzehnBaby]

If 900 Albert is an issue so is all the development on Carling at Preston (6 more towers) so is all the development on Parkdale (3 more towers) so is all the development at 340 Queen (3 more towers) so is all the development that Claridge is completing at Lebreton.

Its a cop out to get out of the deal. Plain and simple. He doesnt have the money, the track record is overwhelming, look at every single decision that has been made by this organization over the last 4 years. They cut corners at every opportunity. Real estate is being developed everywhere directly linking to the development of Lebreton, to suggest that two towers at 900 Albert is the main reason while you dont hear boo about the 12 other buildings being built is hilarious to me. You all keep buying what this con man is saying its crazy, just look at all the facts.

Right. And PWC is a fly by night consultant?

Maybe EM paid them off?

 

[Micklebot]

Right. And PWC is a fly by night consultant?

Maybe EM paid them off?

Tbf urbanation reaffirmed 4 months after the pwc report was released that they still believe there will be sufficient demand for both projects. Were they paid off by Ruddy?

Different models using diferent assumptions yeilding different conclusions... time will tell who is right,

 

[AchtzehnBaby]

Tbf urbanation reaffirmed 4 months after the pwc report was released that they still believe there will be sufficient demand for both projects. Were they paid off by Ruddy?

Different models using diferent assumptions yeilding different conclusions... time will tell who is right,

Yes, but as we have discussed in the past; Urbanation is not considered to be of a similar caliber as PWC.

I do doubt their report. I would trust a more reputable and experienced firm for such a huge development.

 

[coladin]

Tbf urbanation reaffirmed 4 months after the pwc report was released that they still believe there will be sufficient demand for both projects. Were they paid off by Ruddy?

Different models using different assumptions yielding different conclusions... time will tell who is right,

If I understood correctly, the TBF urbanation did not reaffirm, and was an older report? I did not see anything other than the one that was brought to council I think,

 

[Relapsing]

Can that neighbourhood handle the type of density that those buildings would bring?

For the most part, yes. It's at the intersection of two rail lines, easy access to downtown; retails stores will be going into the ground floors, with an expectation of a grocery store being a tenant; the existing library for the neighbourhood is undergoing renovations, and the new main branch will be even closer; lots of available green space, although I recall councilman Leiper expressing concerns there wasn't quite enough...

The major issue in my mind is the grocery store, as this neighbourhood is already underserviced in that regard (nearest large format store is in Westboro, although there are smaller stores, like the Hintonburg Marche, that serve most of my needs as a local resident), which would be solved quite nicely with a larger store going in on Albert St.

 

[bert]

Yes, but as we have discussed in the past; Urbanation is not considered to be of a similar caliber as PWC.

I do doubt their report. I would trust a more reputable and experienced firm for such a huge development.

12 towers built within 2 km or less on the LRT and O train line linking to Lebreton but you dont think that these will impact the redevelopment but 900 Albert will.... You cant be serious. The site on Queen is just as close as Albert and Claridge is literally building on site.

I cant believe you actually dont see the correlation. Its a little suprising given the data that you think thats the reason that Melnyk is pulling out and not because he doesnt want to put any of his own money into it. He hasnt said one truthfull thing in years use your deductive reasoning.

 

[Micklebot]

Yes, but as we have discussed in the past; Urbanation is not considered to be of a similar caliber as PWC.

I do doubt their report. I would trust a more reputable and experienced firm for such a huge development.

Point is there are experts on both sides. PwC is certainly more highly regarded, but that doesn't mean you should dismiss Urbanation outright. Time will tell, no firm has a perfect track record, and both these firms are better positioned than I am to make the determination, so I'm not willing to dismiss either.

If I understood correctly, the TBF urbanation did not reaffirm, and was an older report? I did not see anything other than the one that was brought to council I think,

Yes, Urbanation revised the original report in Aug 2018, I believe at the request of Ruddy. There are quotes in a bunch of articles about the lawsuits that talk about it, but I haven't seen the full report.

 

[bert]

Point is there are experts on both sides. PwC is certainly more highly regarded, but that doesn't mean you should dismiss Urbanation outright. Time will tell, no firm has a perfect track record, and both these firms are better positioned than I am to make the determination, so I'm not willing to dismiss either.



Yes, Urbanation revised the original report in Aug 2018, I believe at the request of Ruddy. There are quotes in a bunch of articles about the lawsuits that talk about it, but I haven't seen the full report.

Its alot more simple than whether Urbanation or PwC report say it will impact it or not considering the argument at hand. If someone is trying to buy a condo the locations we have spoke about are all basically the same, they all use the same amenities and are all in the same neighbourhoods. They are all walking distance and on light rail either one or two stops away from Lebreton.

Just think about when you have ever bought a house or condo how big of an area would you be looking in?

 

[Micklebot]

Its alot more simple than whether Urbanation or PwC report say it will impact it or not considering the argument at hand. If someone is trying to buy a condo the locations we have spoke about are all basically the same, they all use the same amenities and are all in the same neighbourhoods. They are all walking distance and on light rail either one or two stops away from Lebreton.

Just think about when you have ever bought a house or condo how big of an area would you be looking in?

the contention is about changes to the developments reducing the share the market the Rendevous bid could count on. I honestly don't know, where any of the other ones you mentioned changed to include more units or created since the Rendezvous bid was launched/won?