As those of you who were on Twitter yesterday know, there was a lot of uproar at Vancouver city hall yesterday as journalists tried to make sense of the numbers swirling around like a meteor shower as the mayor and city manager attempted to make the case that the city had turned the Olympic village lead into gold.
My basic story is here, but many of us are still trying to sort out the numbers. You can see from the variety of ways that reporters tackled the story yesterday/today how tough it was.
The document I relied on was the most recent report from the receiver, Ernst & Young, which laid out all the money that has been brought in since the receivership started and what all the costs were, from the strata fees the city had to cover for empty condos to remediation of suites to marketing. (Weirdly, people from the city didn’t seem to know how to reconcile their own numbers with what was in the receiver’s report, which made it hard for all of us to figure it out.)
But that report doesn’t explain many of the other murky aspects of the Olympic Village financial situation.
As I’ve been noting on Twitter, I still have a lot of questions that I’m not sure I know the answers to.
For example:
– City manager Penny Ballem said that, besides the $411 million the city netted from all of its sales, the $68 million it got from seizing the properties of the developer Millennium, and the most recent $91 million from Aquilini, it also got $200 million in pre-sales before the receivership started. So that all added up to $770 million.
So what’s the financial story for the other $330 million that is supposedly part of what has always been called a $1.1-billion project. Presumably $100 million is what was lost from the original promise of a $200-million purchase price for the land. That leaves $230-million to try to understand. The social housing cost $110 million. So then there’s $120 million left. What’s that about?
– Understanding the amenities part. We’ve been told it cost the city $200 million to build all the amenities for Southeast False Creek — presumably the community centre, the plaza, the public art, the two small parks and the walkways. I’m still not clear on whether only $75 million of that was directly for the Olympic Village (as city manager Penny Ballem tossed in on the whiteboard numbers, somewhere near the end of our little group shouting match yesterday at the hall) and whether the $200 million has all been spent or that’s the total bill for all amenities, present and future, for the entire area.
I’m sure all of you have a dozen questions apiece as well. Let the amateur forensic accounting begin.
30 responses so far ↓
1 Roger Kemble // Apr 29, 2014 at 10:35 am
Well, I do not have a question: suffice it to say I am sorry such a fine development will be forever tainted.
When I see the horrors planned along the Canada Line, no doubt fiscal honey pots for the faces in the trough, I am really sorry that this handsome development will forever be in the red in the ledger of public approval.
Too bad!
2 Bill Lee // Apr 29, 2014 at 11:33 am
And did Aquilini buy the remaining Olympic Village suites with one cheque, or is it pay as they sell them (never)?
Aquilini said, or has been quoted, that the early prices were twice what they wanted to pay. So are the set-asides for Aquilini Speculation, going for so much more than they paid, therefore out of the market?
3 Mark Allerton // Apr 29, 2014 at 11:42 am
At least people are living there, Roger, and it seems like for the most part they are liking it.
I look forward to the festival of hair-splitting that is about to commence.
There is no doubt some spin from the City in the way they are describing this but just to put this into perspective I would like to point out that as recently as two weeks ago people were still speculating about whether the City would be out $400M or even $600M* on this project.
(*http://www.theprovince.com/news/Olympic+Village+condos+flipped+bucks+loss+Vancouver+taxpayers+could+million/9734499/story.html)
4 Bill Lee // Apr 29, 2014 at 11:45 am
And you can hear Madame Bula speak clear French on CBUF’s morning programme Phare Ouest with Marie Villeneuve from this morning.
Madame Bula had other topics that silly City finances such as the Sans-Abri etc. in the 15 minutes.
http://ici.radio-canada.ca/emissions/Phare_ouest/2013-2014/index.asp
[ Scroll down to see following text and a ‘jump’ to the segment bookmark ]
Société
La dette du village olympique remboursée
Le village olympique à Vancouver en octobre 2010
On apprenait hier après-midi que la dette du village olympique avait été entièrement remboursée. On parle de ce dossier et d’autres priorités municipales avec la journaliste et chroniqueuse spécilaiste des affaires municipales Frances Bula.
AUDIO FIL La dette du village olympique remboursée
7 h 21
La dette du village olympique remboursée
Durée : 13:17
Whole show (3 hours) Bula about 1h 20 minutes in.
ici.radio-canada.ca/emissions/lib_radio/v3.2/code/indexeur/audiofil-iframe.asp?ide=2495&no=86521042009&dD=2014-04-29&indt=&urlbase=/emissions/Phare_ouest/2013-2014&float=1&br=
5 Bill Lee // Apr 29, 2014 at 11:46 am
I see Millenium, which never “resolved” the 800 million dollar lawsuit with the city is building a new condo development (titled “Boheme” Ahem, ahem) on top of an ex-car dealer lot, kitty-corner to that centre of culture, the Waldorf on East Hastings.
6 Terry M // Apr 29, 2014 at 11:51 am
Yes, Frances, that’s a good title… “Vancouver ‘s (Penny) “stages”…” Did you have good seats in the “theatre”? 🙂
7 Bill Lee // Apr 29, 2014 at 12:04 pm
Timeline and more questions raised by Mike Howell of the Vancouver Courier at:
http://www.vancourier.com/news/updated-city-of-vancouver-sells-final-stake-in-olympic-village-1.1005787
And OMG!, that Ernst and Young link that Frances posted above
documentcentre.eycan.com/Pages/Main.aspx?SID=168 is a nest of vipers and confusions.
And the Globe’s poor-man’s-Hemingway, Gary Mason opines: theglobeandmail.com/news/british-columbia/olympic-village-proves-to-be-a-costly-lesson-for-vancouver/article18317203/ [ 850 words ]
“Bill Good is reviewing the Olympic Village deal with Frances Bula Michaelgeller Sun’s Jeff Lee.”
The full Tuesday discussion is not yet posted up at
cknw.com/the-bill-good-show/ in their audio vault.
Jeff Lee posted on the blog yesterday:
blogs.vancouversun.com/2014/04/28/in-olympic-village-debt-being-paid-off-vancouver-politics-is-alive-and-well/
8 Keith // Apr 29, 2014 at 12:09 pm
And so the debacle is complete, bar the shouting matches over the actual numbers and costs involved. It’s sobering to think that taxpayers controlled the former Expo 86 site on the north shore of False Creek, and the Olympic village site on the south shore of False Creek, and the net financial result is probably a loss.
What’s the point of electing hard headed, savvy business people to office if they can’t make money in the Vancouver real estate market?
Many of our politicians come from a business background, yet when Canadian taxpayer assets are involved, be it resources or property, there doesn’t seem to be much of a return compared to other jurisdictions. (see Norway’s sovereign wealth fund from offshore oil or US government investment in Tesla motors).
9 F.H.Leghorn // Apr 29, 2014 at 12:29 pm
“hard headed, savvy business people”? On this Council? Name three.
Sadly, almost all Councillors and the City Manager have instead follwed careers in which they specialized in spending other people’s money, not chasing profits.
George Puil must be spinning in his grave or, if he’s still alive, swearing on the golf course.
10 teririch // Apr 29, 2014 at 1:11 pm
City involvement at Olympic Village costs taxpayers $150 million
http://www.biv.com/article/20140428/BIV0111/140429932/-1/BIV/city-involvement-at-olympic-village-costs-taxpayers-150-million
11 teririch // Apr 29, 2014 at 3:21 pm
Tuesday, April 29, 2014 – Michael Geller
Some further thoughts on Mayor Robertson’s announcement that city out of Olympic Village without losing a cent!
It was interesting to read and watch the various media reports on the Mayor’s announcement. I was pleased to see that despite the Mayor not addressing the fact that the City had to forgo the balance of the land payment, the media picked this up.
No one seemed to accept his statement that he had rescued the project without it costing taxpayers a cent.
Perhaps the most interesting story was by Bob Mackin in the Tyee. He picked up on two things that neither the Mayor or Dr. Ballem mentioned publicly.
The first is that there remains an outstanding lawsuit against the City from a number of disgruntled purchasers. Also, Aquilini didn’t just buy the outstanding units. They purchased the company that was in receivership. Here’s an excerpt from Mr. Makin’s story:
Ernst and Young vice-president Kevin Brennan does not do interviews, according to spokeswoman Lesli Boldt. She said the transaction announced yesterday meant the Aquilini family took over SEFC Properties Ltd. from the City of Vancouver and became the secured creditor. City hall, however, remains the defendant in the lawsuits.”The court proceedings involve the City of Vancouver and the Salescos for the Village, not SEFC Properties. SEFC is not involved in the court proceedings,” Boldt said via email.The $91-million amount compares with the $96.31 million of liabilities mentioned in the March 12 bankruptcy filing for SEFC. The filing mentioned $92.54 million in land and buildings and $2.77 million in cash.
As for other expenditures, in the City Manager’s Oct 6 2009 report she noted that the City expected to spend an additional $321 million on the affordable housing, infrastructure, community centre and Salt building as follows: Affordable Housing $110 million; Community Centre $36M; Salt Building $15M and Infrastructure $160M. We do not know whether the projects were in fact delivered for these costs.
However, we do know that the City estimated a $64.1 million subsidy for the affordable housing and subsequently wrote down the cost of 84 affordable housing units. I am advised that to date it has not found someone to acquire the remaining units that it continues to subsidize.
I am also told the rent on the Salt Building does not cover the full cost. Finally, no one knows the City’s potential liabilities on the pending lawsuit.
In other words, it was not at all correct for the Mayor to say taxpayers are not having to pay one cent for the Olympic Village. We have already spent tens of millions that have not been recovered, and may never be recovered, with other contingent liabilities.
I am not an accountant; but as a number of people noted yesterday, in order to find out how much the Olympic Village really is costing taxpayers it would be helpful if the City prepared statements for the full project, including the expenditures from the Property Endowment Fund. Then we may have a better picture.
In the meanwhile, I do hope the Mayor stops telling us how he saved us from the misdeeds of COPE and the NPA. It’s quite inappropriate, especially in light of yesterday’s theatre.
12 Bill Lee // Apr 29, 2014 at 3:42 pm
Was the white-board briefing as open as the Vancouver Press Relations [ PDF 156 Mbytes 16 total pages: 5 pages of summary 16 April 2014; 5 pages of 09 July 2013 budget request; 5 pages of justification background 23 Sept 2013] was supposed to be?
Or is it “a foggy day in Vancouver town?
Had me low and had me down”
[ Lyrics by Ira Gershwin ]
http://www.geoffmeggs.ca/wp-content/uploads/2014/04/CMO-Mayor-Council-RTS-10314-City-Motion-in-regard-to-Corporate-Communications-2014.04.16.pdf
13 teririch // Apr 29, 2014 at 4:12 pm
‘Was the white-board briefing as open as the Vancouver Press Relations ‘
***
From what I could gather via tweets being sent out from attendees/press – it was fart in a mitt time.
14 Glissando Remmy // Apr 29, 2014 at 4:41 pm
Thought Of The Day
“Having just heard Dr. Penny Ballem explain OV finances on CBC, all I can say is I promise not to perform any medical procedures if she’ll promise not to do any more real estate developments. ” – Michael Geller, Apr. 13th, 2011
I had lots of thoughts on this Olympic Village fiasco throughout the past six years, but none of them were so brilliantly put on paper as Michael’s… so, thanks MG.
Also no need to write for the umpteen time on this subject. Here’s the whole convo. three – four years ahead of its Prime Time!
http://www.francesbula.com/uncategorized/real-loss-at-the-olympic-village-230-million-but-no-tax-increase-to-cover-that/#comments
Particularly interesting are MG ‘s comments #41 #45 #58.
In retrospect, all for naught, as per my own words #4 :
“Welcome to Las Vancouver! Only place in North America where The House plays on both sides of the table and… loses.”
We live in Vancouver and this keeps us busy.
15 Bill Lee // Apr 29, 2014 at 5:09 pm
Jeff Lee (Vancouver Sun) in his blog:
and also
When it sent out by press release Monday that it had sold its interest in the remaining units to Aquilini Group, the city had no intention of holding a press conference to discuss the monumental turn of events. Instead, Mayor Gregor Robertson’s office suggested he might do a few phone calls to reporters, which it then upgraded to an “availability” at City Hall. An availability is somewhat less than a structured press conference, and does not involve using the podium or microphone system. It’s a scrum.
When a lot media started to take interest, his office then decided it might be better to do a formal press conference. But there was no plan to have city officials involved in the deal speak. When it became clear that we were all asking for an accounting, Robertson told us that City Manager Penny Ballem would do a “technical briefing” in another room after his comments. Even Aquilni officials were not present.
That technical briefing came with no written notes, financial statements or any other accountings of how the city had performed its miracle in paying off $690 million in loans. Instead, during the mayor’s press conference we were handed a two-page chronology of the city’s involvement in the village.
16 Bill Lee // Apr 29, 2014 at 5:10 pm
SunCivicLee’s blog http://blogs.vancouversun.com/2014/04/29/some-key-facts-missing-from-vancouvers-olympic-village-debt-story/
17 tedeastside // Apr 29, 2014 at 8:31 pm
the real estate bubble has changed vancouver’s culture into one where everybody wants to be rich without actually doing anything,
was in SanFrancisco man what a difference in Energy from vancouver, was nice to be in a city where people dont talk about RE all day long, and actually value doing real work, creating value, building things.
thats what vancouver lacks and why van is considered as an also-ran economic status and backwater
18 Roger Kemble // Apr 30, 2014 at 8:24 am
“This is the tendency of all human governments. A departure from principle becomes a precedent for a second; that second for a third; and so on, till the bulk of society is reduced to mere automatons of misery, to have no sensibilities left but for sinning and suffering . . .
And the fore horse of this frightful team is public debt. Taxation follows that, and in its train wretchedness and oppression.”
Thomas Jefferson
19 Sean Nelson // Apr 30, 2014 at 8:31 am
The Olympic Village was a victim of the perfect financial storm of ’08. That we came out as well as we did and that this was apparently the biggest problem we had in hosting the Olympics is, I think, pretty decent news. I’m just glad that, for the most port, it’s over and done with.
20 Frank Ducote // Apr 30, 2014 at 10:09 am
Sean@19 – A lot of people share that sentiment, including me.
21 rph // Apr 30, 2014 at 11:35 am
The Olympic Village was not the only thing built for the Olympics that ended up costing taxpayers money. The City of Richmond engaged in tricky bookkeeping on the overall cost of the Olympic Oval. Amenities, road realignments, public art, and staff costs were all allocated to other city budgets. This despite the fact the sale of adjacent waterfront land and density condo upzoning was supposed to pay for everything. The Oval now runs an annual deficit of about $5 million a year, and will no doubt require subsidization in perpetuity.
Still, the City got a lovely amenity that didn’t end up as a total white elephant. It could have been worse.
22 Jeff Leigh // Apr 30, 2014 at 3:00 pm
@Sean #19
+1 on all counts.
23 F.H.Leghorn // Apr 30, 2014 at 6:41 pm
Sean Nelson and Jeff Leigh surprise no-one in their attempts to put some more lipstick on this pig. The financial problems at the Village were entirely the result of bad decisions made by Council (4 of whom are part of the current Vision clique). They had nothing to do with the “crash” of 2008.
Oh, and before I forget, bicycles suck.
24 spartikus // Apr 30, 2014 at 8:29 pm
Millennium Development came in 3rd out of 3 in the bidding process to construct the Athletes Village.
Someone rejigged the criteria so that Millennium suddenly became number one.
No one has ever, publicly at least, identified who that was.
And that’s the heart of the matter in my opinion.
25 F.H.Leghorn // Apr 30, 2014 at 9:51 pm
Extraordinary claims require extraordinary evidence. spartikus makes an odd allegation in an attempt to muddy the waters.
At CoV bids are open in public. If Millenium was indeed the third choice the first two would have objected.
There was no mysterious “someone”. Councillor Louie stole the report detailing the City’s loan to Millenium to advance the electoral campaign of the erstwhile Friends of Larry Campbell. A unanimous vote of Council decided not to give Millenium the deed to the property and that destroyed their ability to obtain secured loans.
It was political interference by a bunch of self-important wannabe property developers.
I guess if you spend that much time in developers’ pockets you start to think maybe it’s not that hard, anybody can be a developer.
Bungling by short-sighted politicians is sufficient explanation for the general disaster that is the OV. In this market the City was the only developer who lost money building and selling condos. Leftoid apologists and Visionistas will try to claim it was just bad luck, or the world banking crisis or, if all that fails, blame staff. “That’s the real reason we fired their asses” will be the fall-back position.
26 spartikus // Apr 30, 2014 at 11:21 pm
spartikus makes an odd allegation in an attempt to muddy the waters.
That Concord and Wall scored higher in the original bid is a matter of historical record.
Yes. Odd.
As is your comment.
27 TKO // May 1, 2014 at 3:59 pm
There are some claiming that the 2008 financial crisis had nothing to do with the Olympic Village financials. This is a rather brazen claim and one that requires substantiation to be credible. Until then, I will continue to believe that an otherwise viable property development deal would have worked out had it not been for: a) a lack of available credit (something every land deal needs) and b) the immovable deadline of the Olympics which made it impossible to delay the construction of 1,100 units during a time of market downturn (something that many other developers at the time did).
And before I forget, bicycles rock!
28 MB // May 1, 2014 at 4:36 pm
There was once a company called Fortress. despite their name, they were assuredly non-fortress-like when it came to the Meltdown of ’08. That was only one financial institution that collapsed, or was heavily reined in.
Refinancing of hundreds of projects all over the continent — a good many here in Metro Vancouver — was required for an average of two years after Fortress collapsed. That’s a lot of rusted rebar and torn tarps blowing in the wind over the change of the decade.
The Olympic Village was not one of them.
Sean Nelson and TKO …. +1.
29 Don D // May 1, 2014 at 9:25 pm
Hanlon’s Razor: “Never attribute to malice that which is adequately explained by stupidity.”
30 Bill // May 2, 2014 at 12:19 pm
There is enough blame to be shared by all the players in the saga of the Olympic Village so it really shouldn’t be such a partisan issue and the City should fess up exactly how much the party cost us. We should not have to pore through various statements and reports to ferret out the net cost when clearly City staff know exactly how much it cost.
KPMG prepared a good summary report in early 2009 (http://vancouver.ca/docs/sefc/summary-report-of-the-southeast-false-creek-development.pdf) that gives some insight to how this went off the rails.
“In 2002, the Vancouver 2010 Bid Corporation (“BidCorp”, subsequently the Vancouver Organizing Committee for the 2010 Olympic and Paralympic Winter Games (“VANOC”)) entered into an agreement with the City pursuant to which:
–the City would make facilities available for the Olympics for the period from November 1, 2009 to April 7, 2010”
The City was undertaking to provide accommodation for the athletes and with an absolutely fixed deadline but subsequent actions do not indicate that the City really appreciated the risk it was signing on for. Adding price as a factor would make sense as a tie breaker if all other things were equal (or close) but not if it appreciably increased risk of completion.
“To assess the proposals, an evaluation committee was created comprising eight senior City staff with voting rights, and three non-voting staff and one representative from VANOC.”
Was the City staff really qualified to assess a project of this nature and risk to the City let alone manage it?
“Detailed financial information was not included in the submissions from the three developers and, accordingly, there was a limited basis to assess financial ability. The City noted that this may have been due, in part, to the developers’ concerns that financial information provided to the City might be accessible to the public under freedom of information legislation.”
Arguably one of the most important criteria should have been the financial strength of the bidders even without the benefit of hindsight. (Another example of why FOI does a lot more harm to the public interest than good.)