Digging out the Olympic Village

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      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

      Comments

      6 Comments

      montyvan

      Jan 15, 2009 at 12:44pm

      Instead of the NPA Witch Hunt this council has embarked on, it would have been far more interesting to put Fortress in the bright, white spotlight. After all, it is they who are holding Vancouver "hostage" over financing they are now withholding. Surely there must be SOME recourse the City can take. But no, it's easier to blame the NPA, so, there you have it.

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      dhpye

      Jan 15, 2009 at 11:52pm

      Vancouver is obligated to provide 1100 suites to the Olympics. If we paid existing home owners $10k each, we could provide everything we've agreed to for $10 million, and help out a bunch of homeowners in the meanwhile.

      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.

      Curious Guy

      Jan 16, 2009 at 7:03am

      Here is a link to an interesting report from former Vancouver CFO Estelle Lo on the City’s website:

      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!!!

      romeogolf

      Jan 16, 2009 at 7:09pm

      When are you going to update Suzanne Anton's photo? It's a tad dated.

      disappointedcitizen

      Jan 23, 2009 at 9:33am

      This whole thing breaks my heart. I am a 52 yr old woman , born right here.Lived here my whole life. Due to serious injuries from a car accident I am on a perm. disability pension. It has always been my dream to go to the winter Olympics. And here they are, so close I can physically touch them and I wont be able to see even one event because the tickets are so outrageously priced. Then to read this article and to see at the end that there will be 850 units available to be lived in and only 120 available for rent makes me livid !! Taking those units and making them available to people such as myself at an affordable sum would ensure a constant source of revenue to help pay toward the debt while providing safe and stable homes for residents...such as myself. This has got to stop. All people deserve a decent roof over their head where they will be safe and secure. This greed is making me sick to my stomach. What does the new Mayor plan to do to provide homes for people ???

      plg

      Apr 9, 2009 at 2:05pm

      Mr Geller likes the idea of an auditor and makes reference to our provincial audit office.

      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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