Selection of Ontario Place tenants 'not fair, transparent or accountable'

Premier Doug Ford’s office was intimately involved in the Ontario Place redevelopment process, which was “not fair, transparent or accountable,” the province’s auditor general wrote in a blistering report released Tuesday.

Shelley Spence found that some applicants, including an eventual winner, Therme, had “direct access” to a vice-president of Infrastructure Ontario (IO) who was responsible for financial assessments.

Three bidders — Therme and two unnamed companies — also met with staff in Ford’s office in the summer of 2019, early in the open period of the call for development (CFD).

Therme and one of the other companies also met with then-tourism minister Lisa MacLeod that summer. 

“This is in contravention of the CFD's stated process that said ‘No communication with government staff or appointed officials is permitted during the Call for Development process,’” Spence wrote.

“This rule was added to the design of the CFD to ensure fairness and transparency for all participants, yet it was not followed,” she wrote.

Meeting minutes “were not kept” throughout the process, Spence added.

However, speaking with reporters on Tuesday, Spence noted: “We do not have any evidence of the premier's office interfering in the process.”

A spokesperson for Therme said the company had no knowledge that anyone it met with was also assessing proposals.

The IO vice-president, who is not named in the report, exchanged nine emails and held one phone call with Therme’s legal counsel “on media interest about Therme's involvement in the CFD process, an introduction to the transaction advisor and an invitation to an event at the legal counsel's firm,” Spence wrote.

The VP, who also had direct reports on the assessment team, had two more conversations with other applicants — one on a personal cell phone, the auditor general found.

“By communicating with only some participants during the open period, in contravention with the CFD, there is a risk that the process is not perceived as transparent, accountable and fair to all participants,” she wrote.

Therme, an Austrian company that was chosen to build a private spa and water park out of 34 proposals for the future of Ontario Place, said it didn’t have an unfair advantage.

“The bid process was clear to us, and any questions we may have had were answered within the process prior to the close of the submissions deadline. Therme Group followed IO’s process and fully complied with its requirements at every stage in our submission and negotiations,” it said in a statement, in part.

“We are pleased the Auditor General's report confirms that Therme Group was a finalist in the 2017 process, followed the established process in 2019, and was successful on the basis of the merits of our bid.”

Michael Lindsay, the CEO of Infrastructure Ontario, stressed that Spence “found no evidence that there was any inappropriate contact between IO employees and our bidders.”

Infrastructure Minister Kinga Surma was ill on Tuesday, the government said, so Lindsay, a public servant, responded to reporters’ questions about Ontario Place in her stead.

Discussions between IO and bidders were “logistical and procedural” and “did not bear in any way upon the evaluation of proposals that came in,” he said.

Lindsay added that he wasn’t the IO VP noted in the report as it was before his time with the agency.

Spence said company names were anonymized because the report details how the government ranked their proposals, which constitutes “commercially sensitive information.”

Her office does not usually name individuals. 

“It's quite often unfair to be naming people's names in a public report like that,” she said.

Evaluation of applicants was 'irregular'

The province’s assessment process, handled by seven assessors from IO and the Tourism Ministry, was far from objective, Spence found.

In one example, the group behind the West Edmonton Mall, called Triple Five, saw its submission marked “insufficient information provided to assess,” but was handheld through a second chance.

Ten bidders received “insufficient” marks. An IO VP reached out to Triple Five — and only Triple Five — and asked the group to add specific information to its submission “that would make a re-assessment possible,” Spence wrote.

At the VP’s direction, an assessor increased Triple Five’s scores. IO then presented the group to staff in the premier’s and tourism minister’s offices as the “top-ranked” submission if the government wanted to go with a single developer, Spence wrote.

It was one of several scores that were “adjusted” after they had been evaluated, Spence found. Almost 80 per cent of score improvements went to submissions that IO ended up recommending to the government.

“In a normal procurement, that would be very unusual,” Spence told reporters, referring to apparent coaching behind the scenes.

But this wasn’t a normal procurement.

That was “deemed restrictive … because the government wanted complete autonomy to select the participants,” Spence wrote.

Instead, the government set the redevelopment process as a real estate transaction, which has fewer guardrails.

“Flexibility was always a part of the process,” Lindsay said, adding that he stands behind IO’s recommendations.

Comparable developments, like Hamilton’s Pier 8 redevelopment and Waterfront Toronto’s Quayside project, were procurements, Spence noted.

Even without adjustments, the evaluations were subjective, Spence found.

Bidders were flying partially blind as the province did not initially disclose nine of its 28 assessment criteria, including markers like compatibility with the site, degree of public accessibility and financial considerations to the province, the auditor general wrote.

The criteria may not have mattered anyway — one participant ended up ranking higher than another, despite scoring lower on the “four primary areas of consideration,” Spence wrote. 

Costs have skyrocketed

The province is now on the hook for $1.8 billion more than it was when the call for development was issued — an estimated $2.2 billion in total, the AG found.

IO estimated that parking facilities will cost from $280 million to potentially more than $400 million.

Public costs also include developing the public realm of the project and connecting public transit from Exhibition Place to Ontario Place. 

“None of these costs were presented to decision makers when Infrastructure Ontario and the Ministry of Tourism recommended a multi-partner approach,” Spence said.

The government could have instead chosen a single developer for the entire site, which “would have could have covered some or all of these costs,” she said.

Costs for the new Ontario Science Centre, which will eventually move to Ontario Place, have jumped by nearly $400 million, Spence wrote.

The science centre's relocation is now planned to cost hundreds of millions more than what a full-scale rehabilitation of its existing site was estimated to. 

“I don't agree with that characterization,” Lindsay said, noting that costs are not yet finalized for the “new, state-of-the-art, bespoke, built-for-purpose Ontario Science Centre.”

NDP calls for Surma’s head

Official Opposition Leader Marit Stiles said the development deal was “rigged from the start” with “the fingers of the premier’s office all over it.”

Surma "has got to go,” she said. “And if she won't resign, Doug Ford needs to do the right thing and fire that minister.”

The NDP has asked the integrity commissioner to look into whether the government gave Therme “preferential treatment.”

“Everything that can go wrong in public procurement went wrong with the Therme deal and the move of the Ontario Science Centre from the Don Valley to Ontario Place,” Liberal finance critic Stephanie Bowman said. “They didn't follow their own process because they had already made up their mind to choose Therme.”

Green Leader Mike Schreiner said the redevelopment “has always been about putting insider profits before everyone else.”

Ontario Place For All, a group that requested the audit back in 2022, said the government should cancel Therme’s lease. The auditor general pegged that cost at $30 million in her report.

“Ontario taxpayers will never see this investment paid back, and we will never see Ontario Place West Island back in public hands in our lifetime,” the organization’s co-chair, Norm Di Pasquale, said in a release, referring to the $1.8-billion billion price tag.

Is Therme ‘broke’?

The auditor general found “financial concerns” about Therme that still haven’t been addressed.

After reviewing financial statements of Therme's parent company, IO found in 2022 that “Therme Group had low liquidity and it was not cash flow positive,” its equity value was under one million euros, and “the financial strength of the Therme Group appeared weak,” the auditor general wrote.

The IO adviser sent an email to that effect just 12 days before Therme signed the lease.

Stiles said she was struck by “just how broke Therme is.”

“The extraordinary ends that this government would go to — these ministers and the premier's office and everybody — to make this deal work, even though, my goodness, Therme barely had enough money to buy a condo in Toronto, let alone redevelop our waterfront,” she said.

IO, government accept all but one recommendation

The auditor general made several recommendations to Infrastructure Ontario and the Ministry of Infrastructure around transparency, fairness and how to properly evaluate submissions for a major project.

Both organizations accepted all the recommendations except for one regarding a heritage impact assessment report, as the ministry said the site is exempt from the Ontario Heritage Act.

Due to an error in the auditor general's report, this article has been updated to remove a reference to an applicant's meeting with then-tourism minister Michael Tibollo. The auditor general's office clarified after publication that there was no evidence of the meeting taking place.