The Auditor General’s Report, Part 5: The Future, Continued Privatization of Ontario Place

The construction of Therme’s stadium-sized waterpark, the doubling in size of Live Nation’s concert venue, and the relocation of the Ontario Science Centre are considered to be the first phase of the redevelopment of Ontario Place. The Auditor General’s report also notes that a second phase is planned. In a May 2020 Treasury board submission, the Ministry of Heritage, Sport, Tourism and Culture Industries noted that “The approach to Phase 2 is currently under consideration and contemplates the development of a large-scale entertainment destination on a portion of the East Island and mainland.”

A second phase of privatization would, like the first phase, entail considerable public investment.  The Auditor General’s report notes that in an earlier briefing to the same ministry and to the Premier’s office, Infrastructure Ontario “stated that the government would be responsible for lagoon in-fill on the East Island for a larger-scale tenant for the future phase.”

Documents obtained by the NDP and shared by Global News earlier this year appear to confirm that Phase 2 would potentially involve filling in and paving the lagoon, also known as Brigantine Cove—the body of water between Budweiser Stage and Trillium Park. The purpose would be to add to the land available to build on. An August 2022 briefing prepared for the Premier’s office describes this as “Phase 2: Potential Future Development Opportunity (up to 25 acres).”

According to Global News, a September 2020 document explains that “Phase II contemplates development of a large-scale entertainment, retail and restaurant destination on a portion of the East island and mainland.”

What could that “large-scale entertainment venue, retail and restaurant destination” look like? One possibility for the nature of the development—and perhaps even the eventual developer that will be selected—is hinted at in the Auditor General’s report. One of the applicants proposing a comprehensive development on the Ontario Place site as a whole was a company called Triple Five. Triple Five initially received a low score in all categories of evaluation and was noted as having “Insufficient Information Provided to Assess.” But after the consensus evaluation meeting, a VP from Infrastructure Ontario reached out to Big Five to request clarification on submission details, and exchanged a series of further e-mails and phone calls with them—a process that was not pursued for any of the other 10 participants who had similarly provided “Insufficient Information to Assess”. Triple Five resubmitted their presentation 70 days after the deadline, receiving revised higher scores.

Triple Five is a company that, according to its website, “has developed, owns, and manages the world’s first, second and third largest tourism, retail and entertainment complexes of its kind,” including the West Edmonton Mall, Mall of America, and the American Dream indoor amusement park and luxury shopping mall.

Will the Phase II addition to Ontario Place be an outpost of the West Edmonton Mall? The Ministerial Zoning Order (MZO) for the property only explicitly prohibits “residential, hotel, and casino uses”— and in fact lists “retail stores” and “eating establishments” as permitted uses. And it would be easy enough for the government to explicitly add “shopping mall,” “nightclub,” or whatever they please to this list, as it’s part of a regulation which can be adjusted without approval from the Legislature, with little recourse for public debate or opposition.

Following the Money

The Auditor General’s report revealed substantial increases for public realm spending, both for Therme’s project and in the provincially-led portions of the site.

As noted in an earlier post, the day before the lease was released, Therme apparently confirmed with Infrastructure Ontario that they would be spending $700 million on their project—up from the $350 million stated in their Call for Development submissions and in subsequent documents dating from 2019 to 2024. This included a projected spend of $200 million on public realm work—up from $10 million in previous documents—an astounding increase of 2000%.

This may be, at least in part, an effort to conceal the direct subsidy that the Province is providing to Therme for the construction of these park areas. In addition to constructing a parkade whose spots will be mostly reserved for Therme (over $280M), demolishing the West Island’s buildings and trees ($40.4M), and completing site servicing of Ontario Place as a whole ($391.9 M), the Province is contractually obliged to provide an additional $25 million in direct subsidies to Therme’s construction work—$10 million for its public realm, and $15 million for its shoreline work.

As the Auditor General noted, there is no stipulated minimum spend for construction by Therme in its 297-page contract, so whatever figures are released publicly are of no material consequence to Therme’s actual construction budget.

However, Therme’s original projected spend of $10 million on public realm certainly would have raised eyebrows when the lease revealed a $10 million public subsidy that conveniently offset that amount—and on top of that, showed that the Province was contributing $15 million towards Therme’s shoreline work. This directly contradicts public claims, by the Province and Therme, that the Therme deal was justified in part by the Austrian company paying out of its own pocket for the construction of public parkland. The announcement that Therme is now, supposedly, spending $200 million on parks and public land conveniently conceals the $25 million public subsidy, and restores the narrative that Therme is paying for public parklands, even if the truth may turn out differently.

Is a similar narrative twist in the works for East Island? Infrastructure Ontario has stated that its current estimate for the public realm at Ontario Place is now $500 million, up from its $50 million estimate three years ago. It told the auditor general’s office that “early estimates prior to a fixed design may have reflected early concepts including a basic park of Trillium Park level of design” and that “estimates may not have taken into consideration the considerable site rehabilitation requirements.”

However, the majority of site rehabilitation requirements—including soil rehabilitation, shoreline reconstruction, and even the construction of roads—are accounted for in a separate line item. The $500 million budget amounts to some $18 million per acre, or $413 per square foot. At this price, the entirety of the public realm could be paved in high-end Italian marble. By comparison, the rehabilitation of Toronto’s Portlands amounted to approximately $1.5 million per acre, the construction of Trillium Park (including the raising of the land by a metre) cost around $4 million per acre, and the construction of Corktown Common (including the raising of the land to create a 8.5-metre-high flood protection berm) cost around $7.5 million per acre.

I do not intend to discourage spending on public space, but the number appears to be very large. It raises the question: Has the number been inflated to set the stage for the further privatization of Ontario Place? It is conceivable that the Phase Two development and privatization of East Island will entail an arrangement similar to that of Therme: in which a new private partner is given free rein on a large portion of land, in return for offsetting the cost of building something akin to privately-owned public space—even if that cost-transfer may, ultimately, be an illusion.

Related:

The Auditor General’s Report, Part 1: The cost of privatizing Ontario Place

The Auditor General’s Report, Part 2: The billion dollar question of parking

The Auditor General’s Report, Part 3: Therme

The Auditor General’s Report, Part 4: Collateral Damage

The Auditor General’s Report, Part 6: Procurement