Construction of the so-called Lansdowne 2.0 development in Ottawa could rise to as much as half a billion dollars, a report from the city’s Auditor General recently found.

The plan to build out the downtown event centre calls for construction of a new event centre, with 5,500 seats, new north-side stands at the facility’s TD Place football stadium, and 1,200 housing units across three high-rise towers sited on top of a new retail podium.

The plan, which was approved by city council in December, projected a $419-million budget for the project. Under its partnership with the Ottawa Sports and Entertainment Group, the city would cover the cost of building the new arena and football stadium stands.

In her report, which was released on June 20, the Auditor General found that the city may have underestimated construction costs for the project to build the new stadium and the north-side stands by as much as $74.3 million, while the costs for a new parking structure on the site may be off by a further $2.7 million. All of which could bring the redevelopment project to nearly $500 million.

"Given the inherent risks related to construction, including the delayed construction horizon and already increasing construction costs, we believe this approach has resulted in some construction estimates that are optimistic," Auditor General Nathalie Gougeon said in the report.

The news is the latest in a series of price escalations for the project.

In an original proposal released in May 2022, the city estimated construction costs at $332.6 million that were based on what it called “conceptual level planning”.

A later report, released last November, estimated the project costs at $419.1 million. That Class C estimate included the cost of preliminary works, construction, soft costs related to design and delivery, escalation allowances, and contingency.

The report from the auditor general estimates the cost of the construction project at $493.4 million, while the cost of a new parking structure could be a further $18.6 million.

It also suggests that the city could be incurring risks of between $10 million and $30 million should estimates of waterfall revenue growth at Lansdowne – including those generated by the Ottawa Redblacks CFL team – fall short of targets.

“The bottom line is that the city is responsible for the cost of construction for Lansdowne 2.0 and any cost overruns,” Gougeon warned. “While this is a city-owned asset, the funding strategy requires the city to cover these costs in the short-term (primarily through the issuance of debt) with the most significant revenue source from this redevelopment (i.e., waterfall distributions) only anticipated to be realized in the later years of the partnership agreement, increasing the risk and uncertainty of these revenues. If the cost of construction has been underestimated, this most likely will result in additional debt required by the city.”

“Further, should proforma projections associated with the partnership fall short, distributions from the waterfall will not be available to the city to support debt servicing.”

Gougeon will present the report to the city’s audit committee on June 24.