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Photo by Wayne Cuddington / Ottawa Citizen

Rusty roof was the first unhappy surprise

At first, it seemed a relatively minor issue. In the spring of 2013 contractors removed insulation from some of the steel beams supporting the arena roof. The steel was corroded. The Ottawa Sports and Entertainment Group commissioned a more detailed investigation to learn just how much of the structure was compromised.

“We originally estimated it would cost a couple of million dollars,” said OSEG partner Roger Greenberg, “but as the weeks went by it just kept growing and growing’.”

The repairs were paid for through a series of “change orders” — variations to the prime contract with Pomerleau. Eventually, the tally to fix the damage reached $22.6 million.

Even on a project of this scale, this was huge. OSEG’s partners in 2013 considered halting all work until they could determine who would pay for the unexpected job. Pomerleau was off the hook because the necessary repairs weren’t covered by the prime contract. However, OSEG felt the extra costs were outside the scope of the umbrella agreement it had with the city. OSEG argued the city should pick up the tab.

City officials had little sympathy for OSEG’s position. But to ensure OSEG had a decent shot at providing the Redblacks with a stadium in time for the start of the 2014 season, the two sides set aside their dispute until work on the stadium, arena and garage wrapped up. OSEG was prepared to challenge the city later if necessary and in the meantime its partners chipped in the necessary funds.

They would soon see the cash returned. City council earlier this week said it would guarantee a loan to OSEG for the full amount of its claim — $23.6 million, all but $1 million allocated for the roof repair. In exchange, OSEG will reduce the amount of its equity in the Lansdowne project by an equivalent amount.

The upshot: OSEG will continue to earn an eight-per-cent return — but against a smaller amount of equity. And the city will get a slightly bigger piece of the action well down the road.