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