We never used to pay much attention to the city’s financial statements, except for a cursory brief on what the total budget was or some quirky expenditure. Now, it’s an annual event to see where the city is with the Olympic Village and the $750-million construction loan it took out to pay for it.
My story here and city’s financial statements here. (Look for Southeast False Creek. Appears in two different places.)
One condo sale at a time, Vancouver has reduced its debt on the Olympic Village to $300-million by the end of 2012, according to just-released financial statements.
“This is on track for completion by the end of next year. It’s going well,” said Councillor Geoff Meggs, the council member who has followed the village’s progress most closely.
“But it still seems to me unlikely we’ll recover the cost of the land.”
So goes the city’s now-cautionary Olympics saga, which started as a blithe promise from Vancouver to build an athletes’ village in time for the 2010 Games. At the time, both city managers and the private developer who bought the land for the project firmly believed Vancouver’s buoyant real-estate market would ensure profits for all.
But the project turned into an almost perfect storm, as the world recession hit just when village construction was starting in 2008. Millennium Development, which had bought the land for $200-million, discovered its New York hedge-fund lender wouldn’t hand over any more money.
That forced the city into becoming a stop-gap emergency lender, to ensure the project was finished for the Games. And it ended up with the city taking over the whole $750-million construction loan in early 2009.
Finally, two years ago, Millennium allowed the property to go into receivership. It also handed over to the city 32 properties it had guaranteed against its loans.
Both Mr. Meggs and city manager Penny Ballem say it’s impossible to predict whether the remaining 181 condos (as of Dec. 31, 2012) and transferred Millennium properties will do more than cover the last $300-million of the outstanding debt (that figure was $462-million at the end of 2011).
If so, the remaining $171-million the city expected to get from Millennium for the land will never materialize.
There are nine Millennium properties left to sell. The other properties were sold in the last two years and netted the city $139-million.
Marketer Bob Rennie, who has handled condo sales at the village for both Millennium and the city, said another 44 have sold since the financial statements were finalized.
The light at the end of the tunnel is so close that city planners are starting to contemplate what will happen with the empty parcels of land it owns to the west of the village. Ms. Ballem said there are already some conceptual designs for the area, which will include a school. “We’re kind of turning our attention to it,” she said.
Development in that area is meant to help the city pay off the $30-million it contributed to the Canada Line station nearby. But the city will be in a much better position this time to make a clear profit than it was with the Olympic Village. “We won’t have the same complications,” Ms. Ballem said.
The city’s profit in that area, between the village and the Cambie Bridge, will depend on how much density it allows in the zoning before it’s sold off to private developers.
74 responses so far ↓
1 Chris Keam // Apr 26, 2013 at 8:34 am
Exactly Grant 🙂
The ‘flapping gums’ club gains another member.
2 Roger Kemble // Apr 26, 2013 at 10:23 am
Phew all this positive thinquing . . . new VAG, Surrey out pacing Vancouver . . . sell off of the sparkling Pilsbury Doughnut, Broadway underground, Evergreen and Lavalin . . .
I hope this guy . . .
http://www.thecanadian.org/item/2056-anthropologys-capitalism
. . . is listening!
3 gman // Apr 26, 2013 at 10:55 am
What a joke CK,on the whole page there were two projects that ran into trouble and it had nothing to do with sales their sales were fine and completely unrelated to why these PRIVATE projects ran into problems.Now lets compare them to a project that the taxpayers are on the hook for that had limited pre-sales ,uncertainty on social housing,was offered to well paid union worker at cut rate rents and had failed technology that taxpayers will be stuck paying for.And if you look at those other projects now you will see that it all worked out with zero cost to the taxpayers.Its funny also that OV was as prominent on that search as all the others combined.But CK you go ahead and carry on with your juvenile name calling.
You might also ask how many projects were under construction at that time and what percentage of these private projects had problems.
4 Chris Keam // Apr 26, 2013 at 11:17 am
Leghorn’s claim was wrong. End of story. flap-flap.
5 gman // Apr 26, 2013 at 11:20 am
It was their money to lose not mine.
6 Morven // Apr 26, 2013 at 11:43 am
The question that will be asked of the various city administrations is:
– did they assess and manage the risks to the city in an acceptable and reasonable manner.
So far, this chapter is incomplete. But the first draft suggests very mixed risk management.
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7 Richard Wittstock // Apr 26, 2013 at 4:51 pm
Keep in mind that the City also owns all of the commercial space and residential rental units, which in the normal course would be expected to carry (and would be able to service, with positive cash flow left over) debt of approx. 60% of their value. So the goal would not normally be to pay the debt down to zero, just to a level that is sustainable by the income generated by the real estate. But of course, we don’t know what that figure would be because no such information is provided by the City.
It is impossible, from these statements, to really reach any conclusions with regard to the state of the OV. We don’t know the value of the commercial space nor the remaining residential space. We don’t know if they are valued at cost (per GAAP) or at fair market value (per IFRS). We don’t know how much rental revenue the residential and commercial components produce. The list of things we don’t know goes on and on and on.
Funny that I can easily get this information for any publicly-traded REIT from sedar.com and slice and dice all the data to determine the company’s financial health and performance. Publicly-traded real estate companies are required to disclose statements quarterly, audited financials annually, Management Discussion and Analysis documents (MD&A), Annual Information Forms…so as to inform their investors. Are we not, as shareholders in this enterprise, entitled to the same level of disclosure as any two-bit public real estate company on the TSX-V would be required to file???
8 Terry M // Apr 26, 2013 at 5:55 pm
good points Richard @57
“Funny that I can easily get this information for any publicly-traded REIT from sedar.com and slice and dice all the data to determine the company’s financial health and performance. Publicly-traded real estate companies are required to disclose statements quarterly, audited financials annually, Management Discussion and Analysis documents (MD&A), Annual Information Forms…so as to inform their investors. Are we not, as shareholders in this enterprise, entitled to the same level of disclosure as any two-bit public real estate company on the TSX-V would be required to file???”
EXACTLY!
This administration is the most secretive administration In recent history.
Only a corrupt or incompetent one would do that. I bet they are both.
9 gman // Apr 27, 2013 at 1:09 am
Im still laughing at what Chris said…….at @29..”How many multi-million dollar, time sensitive condominium developments have you delivered Gman?
Then at @33 he said….”I don’t know that people need to limit their comments to their specific area of expertise.”
Then @ 43 he says…..” Do you have the expertise to assess the situation? ”
WOW Chris, talk about a scramble,is there any way you could come to some kind of opinion on what the conversation is about?Or is everything just kind of fluid for you?
10 Chris Keam // Apr 27, 2013 at 8:33 am
As I said, people don’t HAVE to limit their comments, but it’s useful to know if they have a clue what they are talking about. Quite simple, easy to follow rationale.
11 Bill // Apr 27, 2013 at 10:15 am
@gman #59
You would have better luck nailing down jello than Chris. He is the master of rationalizing his words when caught in an inconsistency like you have done.
Chris says “but it’s useful to know if they have a clue what they are talking about” is pretty pointless given that most comments are anonymous so who knows what expertise are behind them. But he had to use it to justify his shot at you in #29 that is clearly inconsistent with his other posts.
12 Mira // Apr 27, 2013 at 10:25 am
LOL,
gman, Bill… CK… guys, guys… 🙂
Richard W & Terry M 57/58
I’m with you both on this.
I think secrecy, incompetence and corruption is what this administration will be remembered for.
13 F.H.Leghorn // Apr 27, 2013 at 11:11 am
What was I talking about? Oh, right, the Olympic Village. Careful what you say about it, no nit is too small for some posters to pick.
Finanacial disasters like this happen to cities all the time. At least we didn’t have to pay a 30% premium to the Mafia on the Village or the stadium.
14 Chris Keam // Apr 27, 2013 at 12:45 pm
“given that most comments are anonymous so who knows what expertise are behind them. ”
If someone provides specifics for their criticisms, you can usually get a sense that they have some background in the area of discussion. If someone said they had experience in a profession, I’d take them at their word until there was reason to believe otherwise. What you fellas seem determined to defend is the right to anonymously spread misinformation and insults. I suspect the best-before date on that counter-productive and selfish approach is coming up fast.
15 Cheezwiz // Apr 27, 2013 at 1:09 pm
I’d have to agree with rf@#6, and Ian S @#47.
Although the waterfront views along the seawall are lovely, this is not an area I’d ever consider purchasing a condo in. Given the waves of terrible publicity that have plagued it since the Olympics ended, I think it’s a miracle that any of the units sold at all.
The OV seems to have been hastily and shoddily banged together, and issues with leaks, toxic mold, and wacky utility charges quickly became apparent once the Olympics ended.
I’m also uneasy about the safety of the former industrial land the development sits on, and am wondering if there will be more problems to come for new residents.
I know Bob Rennie was brought in to try to do marketing spin, and some units were being offered to City employees & teachers. Does anyone know if a lot of units remain unsold?
16 gman // Apr 27, 2013 at 1:16 pm
CK you can talk in circles all you want and you can obfuscate by questioning peoples expertise all you want.But the thing is Chris is that you would have to be living under a rock not to know the fiasco that happened with OV.So I think we are all somewhat experts on the subject.As far as you trying to accuse people of name calling,well maybe you should re-read the comments Chris because that statement has your name all over it.
Now I wonder what it will take to get some real accounting of the damage.I hope it wont end up like the battle of Athens back in 46.LOL
http://www.youtube.com/watch?v=U5ut6yPrObw
17 Richard // Apr 27, 2013 at 1:55 pm
Cheezwiz, read the article, it actually states the number of units unsold.
18 Chris Keam // Apr 27, 2013 at 1:57 pm
Gman:
I expect the reasons for the issues with the Olympic Village are somewhat more complex than:
“Oh well, what can ya do,some people couldn’t organize a one man line up at a two hole outhouse.” (your words)
I’m interested in hearing somewhat more informative comments on the topic. Thankfully, we see others are willing to expend a little effort toward a grown-up conversation, and provide more detail regarding their concerns.
And, because like Bill, reading comprehension isn’t your strong suit, once again, the issue with name-calling is around accountability. It’s clear you’d prefer not to have to stand behind your remarks. Little wonder.
19 Bill // Apr 27, 2013 at 2:48 pm
“I’m interested in hearing somewhat more informative comments on the topic”
Yet you responded to the comment (which was not directed at you) and subsequently posted another half dozen or so in rebuttal but have not commented on the OV or on any one elses comments. Hmmmm.
20 gman // Apr 27, 2013 at 2:51 pm
CK I listed several possible reasons why this thing went south but you don’t want to address any of them,instead you try and change the conversation as usual with your silly insults.Tell me Chris are your arms getting tired holding up the curtain for the man hiding behind it?
21 Chris Keam // Apr 27, 2013 at 3:08 pm
“Tell me Chris are your arms getting tired holding up the curtain for the man hiding behind it?”
If you have a specific accusation, then bring it forward. Provide facts and evidence.
I’m going to go put the kettle on and then watch for it to boil, if you know what I mean.
22 Morven // Apr 27, 2013 at 5:13 pm
The simplest thing to say (without ad hominem attacks) is to osberve that just about everything directly and indirectly associated with the Winter Olympics was imbued with excess optimism on the part of the political classes.
And the remnants, such as OV, are just as much now imbued with excess pessimism.
But it might have been different and better for the city taxpayers if the OV process had been more transparent and accountable.
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23 Bill Lee // Aug 1, 2013 at 1:28 pm
All coming to pass…
City of Vancouver taxpayers facing upwards of $300-million loss on Olympic Village: Expert
by Sam Cooper, The Province August 1, 2013 9:38 AM
http://www.theprovince.com/news/City+tough+over+Olympic+Village+costs+Expert/8733640/story.html
Photos ( 3 )
Vancouver, BC: JULY 31, 2013 — The Olympic Village Wednesday, July 31, 2013. The City of Vancouver is expected to take a financial bath of at least $400-million on the deal to build the condominium project tied to the 2010 Winter Olympics. at least 100 condo units are still for sale. Photograph by: Jason Payne , PRV
VANCOUVER — In early 2009, Mayor Gregor Robertson warned Vancouver taxpayers that they were on the hook for “all of” the $1.1-billion Olympic Village project. After five years that dire statement is coming much closer to reality.
The Province’s analysis shows that with marketing costs still mounting, and about 130 hard-to-sell village homes left, when the last unit is sold final taxpayer losses of over $300 million seem realistic.
In 2010 a receiver, Ernst & Young, was tasked by the city to regain as much as possible of the $750 million owed to taxpayers, after developer Millennium defaulted.
The $750-million loan didn’t include $171 million that the city was owed by Millennium for waterfront land that the village was built on. The city’s latest financial statements say that after writing off a $50-million loan loss, about $300 million remains to be paid.
The problem is, real-estate experts say the remaining village homes generally have the worst layouts and views. According to The Province’s rough estimates, potential sales revenue might only come to about $100 million, after expenses. That means taxpayers seem likely to owe over $200 million and lose the value of the land.
….
The latest court-ordered marketing update from Ernst & Young shows that as of June, 339 units have been sold by the receiver, for proceeds of $331 million. The receiver gave the city $250 million. The rest of the money was gobbled up by real-estate-agent and marketing costs, strata fees, mounting legal fees, unexpected repair and maintenance bills and the receiver’s management fees of over $5 million.
[ more ]
24 Morven // Aug 1, 2013 at 3:58 pm
If we are on the hook as suggested in the last comment, it is a perverse strategy to embark on ambitious bike lane programs as an example when some fiscal prudence is called for.
Who is setting this strategy ?
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