Auditor general slams Ontario Place redevelopment process as unfair, subjective

TORONTO — A European company developing a spa and waterpark at Ontario Place got special access to provincial executives during a submission process that was not fair or transparent, Ontario’s auditor general said Tuesday in her annual report.

Auditor general Shelley Spence also found that it will now cost more for the government to build a new Ontario Science Centre at Ontario Place than it would have to maintain the site it abruptly closed earlier this year.

Three participants in the Ontario Place call for development process attended meetings with the premier’s office and other political staff, even though that was against the government’s own rules, Spence found. There is no evidence the premier’s office interfered in the process, she said.

One of those participants was the ultimately successful bidder Therme, whose planned spa and waterpark has faced a lot of criticism. The company communicated with a vice-president at Infrastructure Ontario, Spence wrote.

“The VP at IO exchanged nine emails and held one call with Therme’s legal counsel on media interest about Therme’s involvement in the (call for development) process, an introduction to the transaction adviser and an invitation to an event at the legal counsel’s firm,” Spence wrote.

“By communicating with only some participants during the open period, in contravention with the (call for development), there is a risk that the process is not perceived as transparent, accountable and fair to all participants.”

Therme Group wrote in a statement that the bid process was clear and any questions they had were answered within the process before the deadline.

“Therme Group followed (Infrastructure Ontario’s) process and fully complied with its requirements at every stage in our submission and negotiations,” the company wrote.

The government’s process for assessing all of the proposals was also irregular and subjective, Spence concluded. Financial concerns about Therme Group were ignored and Infrastructure Ontario didn’t verify if the company actually owned and operated the six spas it mentioned in its submission as proof of concept.

Overall, the process was not fair, transparent or accountable, Spence found.

Michael Lindsay, president and CEO of Infrastructure Ontario, disputed that characterization.

“We wanted to take in ideas from across the globe and compare them on an apples-to-oranges basis to see which of these ideas best aligned with the government’s vision and would have the best benefits to taxpayers,” he said.

“We did so, creating a process that was competitive, that had non-partisan evaluation at its core, and that borrowed many of the best practices of what we at Infrastructure Ontario are known for in respect of running these processes, but flexibility was always a part of the process.”

Spence also found that the cost estimate for building and maintaining a new science centre at Ontario Place has increased by nearly $400 million from the government’s spring 2023 business case for relocating it, meaning it will cost approximately $1.4 billion — higher than the $1.3-billion estimate for maintaining the attraction at its east Toronto location.

The increase is due to higher design and construction costs, life cycle and maintenance costs, and ancillary costs that have added up because of changes to the scope of the planned building and about $61 million in cost escalations, Spence wrote.

Lindsay said he doesn’t agree that building a new science centre will cost more than rehabilitating the old one, noting that project would also be facing inflationary price increases. Costs are not yet final, he said.

As of February 2024, Infrastructure Ontario projected the total cost of the Ontario Place redevelopment to be $2.2 billion, the auditor said.

NDP Leader Marit Stiles said Premier Doug Ford is determined to see the Ontario Place redevelopment through as his “vanity project,” no matter the cost. The approach the government has taken with the redevelopment process is typical of Ford’s general approach to governing, she said.

“It’s a government that just rams through whatever they want,” she said.

“They just do whatever they want with no consideration for the rules, for accountability, for transparency, and frankly, for what the data and the science is telling them. This is a government that’s off the rails, and they’re doing whatever they want at enormous expense to the people of Ontario.”

Spence also found in another section of her annual report that the government did not provide an evidence-based business case for closing 10 drug-consumption sites and replacing them with treatment hub locations, and failed to consult with affected people.

As well, she found that the government’s process for granting Minister’s Zoning Orders — overriding municipal bylaws to speed up development — gives the appearance of preferential treatment for some requests. And she said the government is spending tens of millions of dollars on publicly funded ads that are more partisan than informational.

But deputy premier and Health Minister Sylvia Jones said those examples simply highlight the government’s ability to act quickly.

“I say it speaks to our interest and our motivation to get things done,” she said.

“We’ve had governments for decades study issues, and we need a government now, and you are seeing a government now, that when emerging issues come forward, we are there to provide options and to act.”

Ford’s government has already faced a lot of criticism over the redevelopment of Ontario Place, from the relocation of the Ontario Science Centre, to the awarding of contracts, to the destruction of trees there.

The government has a 95-year lease with Therme for its planned attraction and it shows the province has promised 1,600 parking spaces for the private facility.

Spence’s report said Infrastructure Ontario estimates parking costs to be $280 million for a four-level, above-ground parking structure at Exhibition Place, or more than $400 million for three levels above ground at Exhibition Place and one level below the science centre.

Many of the submissions included the tenants paying for their own parking structures, including Therme’s initial proposal, but the government decided it wanted to control the parking so that all visitors would be subject to the same rules and it could generate revenue for the province, Spence’s report said.

A senior infrastructure adviser raised financial concerns about Therme Group 12 days before the lease was signed, including that it was cash flow negative and its equity value was less than one million euros, but the concerns were not addressed, Spence wrote.

The eventual lease with Therme required the company to have a net worth of $100 million and it met that test, Spence found.

Ontario Place, which first opened in 1971, was closed to the public in 2012 after years of financial losses.

This report by The Canadian Press was first published Dec. 3, 2024.

Allison Jones and Liam Casey, The Canadian Press