Olympic Village & Southeast False Creek Updates Discussion

[Metro-One]

For the first time ever i am happy Burnaby and Vancouver are separate cities!

But this really does 🞵🞵🞵🞵, i hope the provincial government does step in because i really want the street car and other city projects to happen.

This financial crisis could not have happened at a worse time, thanks for kicking Metro-Vancouver's momentum and the olympics in the balls big banks and America!

This financial crisis is the precise reason why completely free market capitalism does not work, for the fat cats only think about today and never the future. Capitalism can work, but it does need to be monitored much more by the government, especially when it comes to loans and banking.

Please everyone watch this video, it tells you the history and mechanics of the modern banking system.

http://video.google.ca/videosearch?q=money+as+debt&hl=en&emb=0&aq=f#

(there is about 20 sec of black at the start, just be patient)

[officedweller]

Yeah - that is a huge potential liability for the City.
Hopefully the Province will come through to provide access to loans - but you really have to question the [past?] free wheeling attitude of the City of Vancouver on "pet" projects. Lots of commentators have criticized the City of Vancouver in not controlling spending - even before the whole Olympic Village issue.
If the Province does come through, perhaps its should be enough to proceed but still "make it painful" for the City - so that some of the other pet projects get reconsidered (i.e. revitalizing Pacific Boulevard with multiways; its probably too late to pare down the revitalization of Granville Street).

[Architype]

I agree that the province should pick up much of this burden for the city. Who would have seen this coming... not them apparently, and what could have been done differently?

[TwoFace]

The "Olympics" is also a Canadian event, I suggest we get Federal Bailout money. Or at least 0% financing from the Fed and get rid of Fortress.

[nickinacan]

Originally Posted by TwoFace

The "Olympics" is also a Canadian event, I suggest we get Federal Bailout money. Or at least 0% financing from the Fed and get rid of Fortress.

Haha! That cracks me up. Just ask Montreal about the Stade Olympique. It cost them well over $1.5 Billlion over the 30 years it took to pay it off. The Federal Government never helped them at all. It was up to Quebec to pay it off. I'm sure a similar situation will happen... although, I'm not sure what the investment is from BC on the project... It seems like the amount being thrown around is actually Vancouver's share.

[flight_from_kamakura]

and as usual, francis bula opens our eyes:

http://www.francesbula.com/?p=930

choice bits-

1. Gregor Robertson and Geoff Meggs told people there that Vision councillors voted AGAINST the proposal back in September 2007, where the city agreed to conditions that would allow Millennium to get financing from Fortress. Those two conditions were providing a $193-million loan guarantee on the total $750-million loan. The other, and this was the news that came out today, was providing a completion guarantee, i.e. the city guaranteed that if Millennium failed, it would find a way to finish building the project. That completion guarantee stipulated that the project had to be finished according to the original designs.

summary, the npa put the city in a pretty difficult position. they 🞵🞵🞵🞵, we knew that, that's why they're gone. still, it's hard pass the harshest judgment without knowing what else was on the table.

3. Neither the “senior city manager” who briefed us nor Gregor Robertson had an estimate of how much the city might lose if a. it had to take over the project from Millennium and b. the 730 market condos sell for way less than originally anticipated. I’ve had one developer sketch out a quick pro forma for me, suggesting that if Millennium was paying $1 billion for the project (200 for land, 800 for construction costs), it was probably expecting to make a 15-20 per cent profit, so $150-200 million. If condo prices are down 20 per cent, that would mean break even — but it still doesn’t mean a loss. Or it (or the city) could try to hang on until prices rise again, but that would mean carrying costs, so it would have to bet that a future price rise would be more than ongoing carrying costs, which are considerable.

right, but the trauma of this scenario is that it sees the city pouring around $300 million. that's nuts. and who believes that these ultra-pricy units will drop only 15-20% over 2007 prices? the americans who were doing so much to price up the market aren't going to be back for a very long time. also, will the city really carry these over to chase a break-even point? never, way too risky, unless they convert them to (ultra expensive) office space in the meantime, which is just irresponsible. plus, i bet almost all of the non complete sales are looking at ways out, even if only to reapply to purchase the same unit at a discount, so we're looking at even more numbers when it all shakes out.

argh! what a cluster 🞵🞵🞵🞵. so damned annoying.

p.s. a link to robertson's statement, outlining exactly what's going on: http://vancouver.ca/pdf/NRMayorOlympicVillage.pdf

[Yume-sama]

They keep blowing the Olympic Village funding completely out of proportion. Not once, in all of the reports I've heard, and they just had a big story about it on Global News Calgary, do they mention that they have been sold as condos for AFTER the game, so it is not exactly the truth to say the taxpayer is now potentially out $800 million. I'm kind of tired of not hearing this little, kind of important fact, at all.

Aren't MOST of the units already pre-sold?
http://www.millenniumwater.com/

[Stingray2004]

Originally Posted by flight_from_kamakura

summary, the npa put the city in a pretty difficult position. they 🞵🞵🞵🞵, we knew that, that's why they're gone. still, it's hard pass the harshest judgment without knowing what else was on the table.

That's a wee bit disingenuous.

Vision Vancouver councillor Raymond Louie was the deputy chairman of the finance committee.

In fact, Vision Vancouver and COPE's David Cadman also approved the deal:

The City is conducting business related to Southeast False Creek and the Olympic Village pursuant to a unanimous Council mandate.

http://vancouver.ca/ctyclerk/newsreleases2008/NRolympicstatement.htm

I dunno why you want to now play politics with the issue.

[Metro-One]

I agree with you yume, in the end the units will be sold so at the very least a good portion of the money spent will be reimbursed, unlike other olympic fiascos they are comparing it too (such as Montreal) And it gets me so angry because this just gives the "anti-olympic" people incorrect fuel to burn with.

[b5baxter]

Originally Posted by Yume-sama

Aren't MOST of the units already pre-sold?

But how many of those units were bought by people hoping to flip them before they even had to make a down-payment and will end up defaulting on their purchase given the current economic slump?

I have no idea how much of a factor this will be but it is a potential liability for tax payers.

[johnjimbc]

This is being pushed as a calamity a bit too strongly. We are talking about marketable and sellable units in a new neighborhood. It's not like there is a billion dollar stadium going to sit empty.

So any reporting showing the total exposure without even attempting to determine sales figures that can be expected in the next 2 to 3 years are just reporting shoddy attention-grabbing headlines. It's no different than me going out to the corner of Robson and Granville and yelling, "The Sky is Falling - Our City is Doomed" at the top of my lungs.

How about this for a worst-case scenario: One or two of the buildings becomes affordable or mixed-income housing. Geez, would that mean they were a "loss" to the city or contributing to assist the affordable housing deficit?

I know it is en vogue to peddle the "end of the universe as we know it" angle (after years of pushing the "a new millennium of wealth of prosperity has dawned" meme), but honestly can't someone report on this with a small tidbit of journalistic integrity.

As for the situation itself, I still get this sense that the financiers on Wall Street are playing the city on this. I just can't shake that sense from anything I do read or hear about the situation. I imagine lead executives looking for ways to eliminate ANY of their risk and still get all the benefits of the huge loan by thinking to themselves, "This is THE Olympic Village. There is NO WAY they are going to let it fail. Tell them we won't pony up any more money unless they take on all the risk. They'll squirm, but in the end they'll pony up. Then we'll get our money with more favorable terms to us, and any risk in the project will be off our books and lower the overall risk of our portfolio."

With that in mind - and if the terms are going to require the city to carry any risk anyway - I'm with the person who just suggested it become a federal government LOAN. May as well have the terms with a government entity. Don't reward the financiers for hanging the city over a barrel. In fact, make them pay in the loss of business.

With a viable alternative, I suspect they'll change their tune and be a bit more amenable to an equitable sharing of risk and more favorable terms to the city.

[Metro-One]

Great post, send that to the editorial in the news paper.

[hollywoodnorth]

johnjimbc you read my mind

[Mininari]

Originally Posted by Yume-sama

They keep blowing the Olympic Village funding completely out of proportion. Not once, in all of the reports I've heard, and they just had a big story about it on Global News Calgary, do they mention that they have been sold as condos for AFTER the game, so it is not exactly the truth to say the taxpayer is now potentially out $800 million. I'm kind of tired of not hearing this little, kind of important fact, at all.

Aren't MOST of the units already pre-sold?
http://www.millenniumwater.com/

Want some cross-country evidence of this?
The SAME news story aired here in Winnipeg a few days ago, and I spent the following day explaining to no less than 3 individuals that the olympic village condos were to be sold as market condos. Even if they don't recoup ALL of the cost of the project, they'll recoup MOST of the cost.

So, is this a screw up? Yes. Did ANYONE see a major financial crisis coming that would cripple construction funding around the world? No! So how is it 'Gordo's fault?

Of course, keeping these facts straight is impossible and most people just believe what the news tells em.

Bring on the witch hunt.

[deasine]

Originally Posted by johnjimbc

This is being pushed as a calamity a bit too strongly. We are talking about marketable and sellable units in a new neighborhood. It's not like there is a billion dollar stadium going to sit empty.

So any reporting showing the total exposure without even attempting to determine sales figures that can be expected in the next 2 to 3 years are just reporting shoddy attention-grabbing headlines. It's no different than me going out to the corner of Robson and Granville and yelling, "The Sky is Falling - Our City is Doomed" at the top of my lungs.

How about this for a worst-case scenario. One or two of the buildings becomes affordable or mixed-income housing? Geez, would that mean they were a "loss" to the city or contributing to assist the affordable housing deficit.

I know it is en vogue to peddle the "end of the universe as we know it" angle (after years of pushing the "a new millennium of wealth of prosperity has dawned" meme), but honestly can't someone report on this with a small tidbit of journalistic integrity.

As for the situation itself, I still get this sense that the financiers on Wall Street are playing the city on this. I just can't shake that sense from anything I do read or hear about the situation. I imagine lead executives looking for ways to eliminate ANY of their risk and still get all the benefits of the huge loan by thinking to themselves, "This is THE Olympic Village. There is NO WAY they are going to let it fail. Tell them we won't pony up any more money unless they take on all the risk. They'll squirm, but in the end they'll pony up. Then we'll get our money with more favorable terms to us, and any risk in the project will be off our books and lower the overall risk of our portfolio."

With that in mind - and if the terms are going to require the city to carry any risk anyway - I'm with the person who just suggested it become a federal government LOAN. May as well have the terms with a government entity. Don't reward the financiers for hanging the city over a barrel. In fact, make them pay in the loss of business.

With a viable alternative, I suspect they'll change their tune and be a bit more amenable to an equitable sharing of risk and more favorable terms to the city.

Thank you. =)

[flight_from_kamakura]

yeah, great post dude, except that:

the feds won't loan the money for this. this is a fiasco because it's going to tie up a hell of a lot of city money, which means delaying other stuff. the units will not sell for the 2006-2007 prices upon which the project financing package was predicated, necessitating some sort of refinancing option. the city will not come out ahead on this, or even even, unless something dramatic happens with the market. and according to the city release, the units are not "mostly sold", they're not even half sold, and the non-complete 2007 sales are almost certainly not going through. as for vision's going along with this one, i don't know too much about that, but it still seems like a pretty bad decision. voila.

not to be a jerk about it, but this is a very big deal.

[TwoFace]

I think the numbers batted around are 250 +/- Sold out of 730.
It’s obvious that the City goofed when putting ‘city will guarantee’ on time completion of the project into the contract. Fortress knows this and has them by the balls. They also goofed by assuming the market wasn’t going to correct and they could get those kind of sales figures out of this/future marketplace.
Regardless, this is the current reality and the challenge is to mitigate it, in order to reduce future tax hikes and cutting of services and other projects.
I would assume the most important thing to do is get rid of Fortress, pay a penalty if need be, and get favorable terms with a Canadian institution (this is a good time to play hardball politics and have our leaders put some pressure on the Banks). And why not the Fed financing, they have no problem bailing out private businesses in Ontario & Quebec.
Either way, when the time comes to sell those units they will be discounted. And although they won’t lose $800M, it will be in the hundreds of $M’s anyway. This sounds like a lot of money, but if it’s a Provincial deficit as opposed just Vancouver’s, it won’t have much effect.
Just selling the lots around BC place and delaying or canceling the "roof" for a couple of years should pay for this particular fiasco.

[SpongeG]

well the city wanted the games

only the city of vancouver residents were able to vote for them so the city of vancouver should pay for it not the rest of BC since they were never given a choice

[phesto]

Originally Posted by officedweller

Now, who benefits from preserving the existing dvelopment strutcure? If Fortress pulls out, Millennium wouldn't have enough money to finish the project. i.e. Millennium defaults on its contracts with the City and with Fortress. Millennium goes bankrupt. If it's cheaper for the City to step in and finish the projects in that scenario, I would prefer that than having the City taking a hit to prevent Millennium's bankruptcy or to preserve the status of the project as a "luxury waterfront community". i.e. If the City takes over, it could be finished as market rental housing.

The main factor is whether that can be accomplished by the time of handover to VANOC.

Where is Millenium in all of this? Up until about 6 months ago, they were considered one of Vancouver's premier and well-capitalized development companies. Now they are in the midst of this mess, and none of Millenium's principles has spoken one word publicly; meanwhile their two other large development projects (Evelyn Drive and Port of Nanaimo Centre) are basically dead?

[jlousa]

I can't disclose all the details, but I can assure you the city won't lose any money on this deal. Vision is out making waves and I have no idea why, they won the election it's time to let it go. The only possible scenario of the city losing money on this is if they go ahead and turn it into non-market housing or rentals, which I would not put past this council. They can very well try and use this to push their cause at the expense of the NPA.

People seem to think the city could be out millions of dollars, in the worst case scenario, the numbers speak for themselves, even if they sell the remaining units at a slightly less price then the old ones they will still be able to cover all expenses, the remaining units are also the most desireble/waterfront units, up until now only the least desireable units have been sold. Those that have purchased have placed 20% down, at that downpayment the developer isn't too worried about people walking away, even if they do, the developer could reduce the price and resell them. Prices have contracted but not by 20% from the selling prices. The biggest factor which is the media isn't covering is this, Millenium has put up it's other COV properties as collateral in this deal. Which means even under the worst case scenario the city gets ownership on Millenniums other properties which is a sizable portfolio and includes the Province building downtown (not the pacific press building). I think one of the biggest reasons Canwest has been blowing this out of the water is a bit of resentment because they lost out on the games to ctv/bell/globeandmail. I am finding the stories in the globeandmail must more balanced.