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$17M Repair Divides Stadium Partners

Wednesday, January 8, 2014

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Severe corrosion of structural steel beams at a stadium renovation project in Ottawa, ON, has sparked debate over who should foot the $17 million repair bill.

The City of Ottawa and the Ottawa Sports and Entertainment Group—the partners redeveloping the stadium—are at odds over the unexpected condition of the Civic Centre’s 46-year-old steel beams and the repair cost, reports say.

A partner with Ottawa Sports and Entertainment Group told the Ottawa Sun newspaper Dec. 30 that the company had paid the bill, but that the taxpayers' liability, if any, has yet to be determined.

City of Ottawa
City of Ottawa

The City of Ottawa and the Ottawa Sports and Entertainment Group are renovating the Civic Centre soccer stadium as part of the $400 million Lansdowne Park redevelopment project.

The parties dispute whether the repair expenses arose in the normal course of the project, or if they should be considered a new problem not contemplated by the sports group when it agreed to the partnership.

The city and sports group are renovating the stadium as part of the $400 million Lansdowne Park redevelopment project. The city’s maximum cost for the arena upgrade and affiliated parking was set at $135.8 million, with a project contingency of $10 million, The Sun reported.

Surprise Corrosion

However, the corroded beams, which were discovered during inspections completed in the fall, surprised both parties.

Wayne Newell, the city’s general manager of infrastructure, detailed the issue in a memo to city councilors on Dec. 23. A copy of the memo is available here.

The steel components were said to have been covered by insulation, fireproofing, ceilings, flooring and other materials. When those materials were removed during the structural adequacy investigation, significant corrosion was discovered.

City of Ottawa / YouTube

When finished, the 40-acre Lansdowne Park site will include an array of retail, residential and commercial properties in addition to the soccer stadium.

“The completed investigation identified extensive repairs required due to corrosion of the structural steel elements of the facility, which would impact the structure’s capacity of supporting its designed loading capacity,” Newell wrote in the memo.

The Civic Centre was constructed in 1967. Previous inspections, including evaluations in 2010, had found the stadium to be in “fair to good condition,” according to the memo.

Pricey Repairs Required

Newell said the majority of the repairs, now nearing completion, involved replacing the arena steel decking or roofing structure.

“In order to safely access this area, scaffolding had to be installed from the arena floor up to the underside of the roof. Working from the top side, the concrete floor was removed, followed by the existing steel deck. Repairs to the support beams were completed and new steel joists were installed along the entire area under the upper concourse,” the memo said.

City of Ottawa
City of Ottawa

Despite the unexpected repairs, the Lansdowne redevelopment project is on track, officials say. The stadium is set for completion this summer.

Other elements that were repaired included the main beam, passageways and critical connections.

Cost Not Considered

The cost of the repairs was $17 million.

"This is something we had not contemplated,” Roger Greenberg, a partner with the Ottawa Sports and Entertainment Group, told The Sun in an interview.

“If we had, we would have provided for it in our budget when we made the deal with the city and estimated what the repairs were going to be."

The group says the city should pay for the repairs.

City: Not Paying

The city, however, opines that the sports group is responsible for repairs that are in excess of the project contingency.

Newell wrote in the memo, “It is the city's view that, with regard to the funding of these unexpected costs, the provisions of the Lansdowne redevelopment plan project agreement related to the city's guaranteed maximum price require OSEG to pay for the costs of the work that are in excess of the project contingency that is contained within the guaranteed maximum price.”

Resolving the Dispute

If the parties can’t come to an agreement on their own, the contract provides that an arbitrator make the call.

The sports group has notified the city that it is considering invoking the arbitration provision of the contract.

Should the sports group be required to pay, reports indicate that the $17 million will be treated as an additional investment, giving the private group a larger share of the proceeds from the $400 million completed development.

Despite the unexpected repairs, the project is reportedly on track. When finished, the 40-acre redevelopment site will include an array of retail, residential and commercial properties in addition to the soccer stadium.

   

Tagged categories: Corrosion; Disputes; Government; Government contracts; Rehabilitation/Repair; Renovation; Structural steel

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