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The city may have to pony up even more new money to address the financial mess of the athlete’s village.
Doug Sarti photo.
January 15, 2009
Digging out the Olympic Village
Should Vancouver have an independent auditor general monitoring its finances?
Heather Deal
Vision Vancouver councillor
“We’re already working on getting all the departments to give us their full budget and making sure that they align with our priorities. It’s something that’s already being undertaken. That level of detail I can’t speak to right now. We have to go back to look at that, but I know that we are already undergoing an internal assessment. There already is an auditor for the city.”
Chris Shaw
Founder, 2010 Watch
“It’s something we called for back in 2002. It’s got to be someone watching over spending like a hawk and reporting in open council meetings what he or she is finding...a totally independent auditor. And enough of this in-camera crap. We saw what that got us. Look at how the auditor general works for the province. You can create the same thing for the city.”
Suzanne Anton
Non-Partisan Association councillor
“The thing that you want an auditor general to do is make sure that you’re not throwing money away on projects that you shouldn’t be doing. Quite often it ends up being very expensive because they tell you you need to do this and this. What we’ve done recently is set up a new business-planning secretariat…to assess city projects and make sure that they are within the city’s mandate.”
Ellen Woodsworth
Coalition of Progressive Electors councillor
“We’ve actually hired KPMG to do an auditing of the books because we are so concerned about what happened [with the Olympic Village]. There are a lot of questions. It’s something that we can consider. There’s an additional expense, but I think that given what happened, we wanted to act immediately to get an audit done. In the long term, yes, we have to get through that.”
Michael Geller
President, Michael Geller & Associates Ltd.
“Intuitively, it’s a good idea. We have it on the federal and provincial level. I think it is always beneficial to have an independent third party reviewing an entity like the city, where the budget is very, very significant. Whenever I hear the auditor general report at the federal or provincial level, I’m always surprised at what they find and grateful that someone is performing that function.”
Since October 2008, the City of Vancouver has shelled out a total of $79 million to keep construction moving along at the Olympic Village.
By today (January 15), contractors expect to have received another $21 million, the fourth and last payment under a $100-million bridge loan that the city extended when the original lender for the project turned off the tap.
More bills are due for work being done on the uncompleted athletes’ village, and no one at city hall knows yet where the money will come from.
Vision Vancouver councillor Geoff Meggs couldn’t say when negotiations will be concluded with New York–based Fortress Investment Group, which previously approved a $750-million loan for private developer Millennium Southeast False Creek Properties Ltd.
Fortress, according to a report by city manager Penny Ballem, has released $317 million of its loan so far but stopped further advances in September 2008 due to cost overruns that have bloated the construction cost of the Olympic Village to $875 million.
“We’ll have to see how it goes,” Meggs, council’s point man for the 2010 Games, told the Straight. “The city will be responsible for the financial arrangement, and we’re responsible for completing it [the athletes’ village]. Who pays will depend on how the financial arrangements work out in terms of these negotiations.”
The councillor didn’t discount the notion that the city may have to pony up new money. “It could mean that,” Meggs said. “We believe we’ve got the resources necessary to go for it.”
In addressing this financial mess, Vancouverites like Jurgen Claudepierre feel left out. On January 12, the 67-year-old man stood in the rain on the steps of City Hall with signs calling for more citizens’ involvement in Olympic spending.
“Listen to the citizens,” Claudepierre told the Straight about what council should do. “Listen to their concerns.”
Claudepierre noted that the previous council, as well as six of its former members who now form part of the new council, could have been more up-front with taxpayers early on when they realized that the city would become neck-deep in Olympic costs.
It’s a sentiment shared by high-profile Olympics critic Chris Shaw. “Everything on the Olympic file has been done in secret,” Shaw told the Straight. “They can’t do that anymore. They need to be engaging the public in this, and, frankly, the public needs to be hearing a range of opinions.”
Development consultant Michael Geller, a former NPA candidate for council, suggests hiring an independent real-estate consultant to review the whole project and evaluate the likely financial results.
Geller noted to the Straight that the current construction cost of $875 million to put up 1.1 million square feet of mostly high-end condos and commercial space, at about $800 per square foot, is “surprisingly high”.
However, Geller supports a unanimous council decision reached in a special meeting on January 12 to ask the province to change the Vancouver Charter to give the city the authority to borrow up to $458 million to complete the Olympic Village. The charter currently requires the city to obtain citizens’ approval through an election-day referendum to borrow funds for major capital expenditures. “As I understand it, what this will do is potentially allow the city to borrow funds at a significantly lower rate than what is currently in place,” Geller said.
Mayor Gregor Robertson has told reporters that the city isn’t talking to any other lenders yet. He dismissed suggestions that the city pull the plug on the Olympic Village that it has committed to deliver to Olympic organizers by November. “Our reputation internationally is at stake here,” Robertson said. “We’ve got to do everything to deliver.”
For Vancouver residents who believe the 2010 Games are too expensive, Maureen Bader, B.C. director of the Canadian Taxpayers Federation, recommended that they call their MLAs to insist that the city shouldn’t be allowed to borrow more money, especially from Fortress. “We’re in a very poor position,” Bader told the Straight. “Fortress knows that they’ve got the city in a vise.”
A few fast facts about the Olympic Village
> Projected total cost: $1.075 billion
> Cost of the land: $200 million
> Original construction budget: $750 million
> Cost overruns: $125 million
> Money needed to complete project: $458 million
> Number of market housing units: 730
> Number of rental housing units: 120
Source: City manager Penny Ballem’s January 9 report
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As far as "saving the reputation of Vancouver", we don't need to save the reputation of the pols who put us in this position. They committed fraud against the city of Vancouver, agreeing to terms which were not within their power, and they committed fraud against the Olympics. They acted outside their power, and they deserve to be prosecuted for abuse of this trust.
We don't need an ombudsman, we just need a "sunlight or bullshit" clause: if a commitment by city council doesn't see light, it must be bullshit.
Bailing this fiasco out would makes us no better than the US.
http://vancouver.ca/ctyclerk/cclerk/20080722/documents/a15.pdf
In it, she writes that the City wasn’t able to borrow $125 million it wanted, on acceptable terms, between Feb. and July 2008. But she hopes things are improving after July. I wonder if the City ended up borrowing this money or not?
The report also says that “An issue of $125 million will incur approximately $15.6 million [$42,700 per day] in annual debt charges beginning in 2009”.
And now they want to borrow $458 million!!!
Since the BC Liberal/Socred coalition took over government they have done their best to reduce the role of the auditor's effectiveness in BC. They even went so far as to prevent the auditor from auditing VANOC's books.
The now famous Kevin Falcon, then minister responsible for deregulation and the 35% solution, reduced the budget of the Auditor General's office not once but three times which significantly hampered its ability to do its job.
However, one government office did not have to submit to Herr Falcon's solution. The Premier's Office and its personal ministry of mis-and-disinformation, the Public Affairs Bureau, increased its budget to almost 5 times that of the Province's Auditor General's Office.
If governments, both local and provincial operated with sound public policy and investment, along with transparency and accountability in the first place, there would be no need for an auditor.
Ms. Deal should be ashamed. As a flag waving booster for the Games and a councillor and parks board member she did not object strongly enough to what Vancouver was investing in the various venues for the Games. Instead she was amongst the architects of this misguided mayhem we now are witness to.
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