Markings for construction crews at Ontario Place in Toronto on Nov. 3.Chris Young/The Canadian Press
The process Ontario used to select the winning bidders to redevelop its Ontario Place site on Toronto’s waterfront was unfair, the province’s Auditor-General says, and the project is now set to cost taxpayers $2.24-billion, or $1.8-billion more than the government’s original internal estimates.
In her annual report released on Tuesday, Auditor-General Shelley Spence says the process used to award a 95-year lease to Austria’s Therme Group to build a large waterpark and spa on the site was not “fair, transparent or accountable to all participants,” did not follow “best practices for large-scale, modern land-use development projects” and broke the province’s own rules.
The report also outlines an array of costs associated with the province’s decision to assume the role of the site’s “master developer” that had not been estimated and were not shared with decision makers when the province’s infrastructure agency, Infrastructure Ontario, finalized the plan to seek bidders to redevelop the defunct site in 2019.
The audit gives more ammunition to local activists and opposition politicians who have opposed Progressive Conservative Premier Doug Ford’s move to hand a large chunk of Ontario Place to a foreign-owned for-profit entity.
Many critics who argue the area should instead be a public park have long charged that the process to select Therme was flawed. The plans for Ontario Place also include enhanced public areas, an expanded concert venue run by existing tenant Live Nation, and the controversial shuttering and relocation of the Ontario Science Centre.
The Ontario Place project was originally promoted by the government as a plan that would require no public subsidy. But costs to prepare the site have spiralled. Infrastructure Ontario had originally pegged the taxpayer costs of preparing the site for use by private-sector operators – including soil remediation, flood mitigation and installing water pipes and other utilities – at $335-million to $424-million in 2019, the audit says.
As of February of 2024, this price had ballooned to an estimated $2.24-billion. The bill now includes the relocation of the Ontario Science Centre to the site for $700-million, more than $500-million in costs for public parkland, $280-million for a parking facility, and an additional $346.9-million in site preparation costs.
The audit says Infrastructure Ontario’s “irregular” and “subjective” bidding process for the site failed to follow its own rules in several ways, including by allowing meetings between multiple bidders and government officials or high-ranking political staff. It also shortlisted some proponents who had scored lower than their competitors on the project’s criteria.
One bidder, the builders of the West Edmonton Mall, Triple Five Group, was even asked to resubmit its ultimately unsuccessful plans for Ontario Place long after the process’s deadline had passed. Triple Five did not respond to a request for comment before deadline. An unnamed Infrastructure Ontario vice-president has also exchanged multiple e-mails with Therme, the report says.
The audit recommends that Ontario strengthen its procurement process for this kind of project. Infrastructure Ontario has accepted most of the auditor’s recommendations.
Infrastructure Minister Kinga Surma was unavailable on Tuesday. But the official who heads Infrastructure Ontario, Michael Lindsay, defended the Ontario Place process, which he said was designed to have “flexibility.”
He said the audit had not found any “inappropriate contact” between IO officials and bidders, and that the contact had to do with “logistical and procedural” matters and did not “bear in any way upon the evaluation of the proposals that came in.”
NDP Opposition Leader Marit Stiles called for Ms. Surma to resign or be fired.
“Everything about this deal was rigged and mismanaged, driven by an opaque process with preferential treatment,” Ms. Stiles told reporters, hours before her party sent out a fundraising e-mail citing the audit and calling the deal a “betrayal of trust.”
In an e-mailed statement, Liberal Leader Bonnie Crombie said if she were premier, she would “investigate and put an end to Doug Ford’s shady backroom deals.”
In a statement, Therme said it had “fully complied” with Infrastructure Ontario’s process. It also noted that the audit mentions that Therme had been shortlisted under a similar but aborted process launched by the previous Liberal government to find a tenant for the site in 2017.
The report says the cost to build and maintain a new Ontario Science Centre at the site had increased by $400-million since early last year. The increase appeared to further undercut the life-cycle analysis the government had used to argue it would be cheaper to relocate the facility to Ontario Place than fix up its existing building in North York, which the government suddenly ordered shut this summer, citing its deteriorating roof.
The audit is also critical of the public consultations the government undertook on Ontario Place, which were only held after the winning bidders had been selected.
And it points to several other comparable projects in Toronto, Hamilton and Chicago, that were subject to more rigorous and competitive procurement processes. The government had classified Ontario Place as a real-estate transaction, meaning it was exempt from procurement law and other policies that apply to competitions for government contracts.
The audit faults Infrastructure Ontario for failing to address financial concerns about Therme, citing a senior adviser with IO who had warned in an e-mail in April, 2022, just 12 days before the lease was signed, that Therme had “low liquidity” and that its equity value before Dec. 31, 2019, was “less than one million euros.”
However, IO had required as a condition of the lease that Therme have a net worth of $100-million and had concluded that it had met this financial test, according to its 2020 financial statements. IO also said it expected that Therme would have to raise capital or arrange for third-party financing for the project.
The audit also says IO had failed to check whether Therme actually owned six spas elsewhere in the world it had said were currently operating using its concepts. Only one of the facilities is actually directly operated by the company, the audit says.
With a report from Laura Stone