Critics of Olympic village deal are spouting nonsense: Sam Sullivan
By Don Cayo, Vancouver Sun
January 30, 2009 10:31 PM
Critics of Vancouver city council’s role in the Olympic village are spouting alarmist nonsense and taxpayers should relax, says former mayor Sam Sullivan.
Despite at least $125 million in cost overruns and the unexpected need for the city to underwrite up to $850 million (the project’s full cost),
“It won’t add a dime to your taxes,” Sullivan told me in an exclusive interview.
“In fact, it’ll come to be seen as a marvellous legacy — the greenest housing development anywhere. And in the end it will make hundreds of millions of dollars for the city’s Property Endowment Fund.”
The four-term councillor and one-term mayor, who did not re-offer after losing his party’s nomination, had told me in an earlier private chat that he was delighting in being out of the spotlight. He has been planning his next career move — he isn’t saying what, other than it’s not politics — and catching up on the reading and other intellectual pursuits that he had to set aside when he won the mayoralty in 2005.
He’s back into the fray with this interview and an article he wrote for the new city caucus website —citycaucus.com — because, he said, he wants to reassure citizens and defend staff and workers who planned and are building the site.
“People are conflicted when they hear my take on it after listening to the noisemakers and seeing the headlines,” he said. “But I’m telling everyone it’ll have no impact on taxes: Zero.”
The reason? City hall conducts its business with two pools of money. Its operating budget has a one-year horizon — taxes in, services out. But the timeline for the multibillion-dollar Property Endowment Fund is decades. And that’s where the financial hit — if condo prices don’t recover in time to produce a profit — will be absorbed.
Sullivan noted that when he was first elected in 1993, this fund was worth just over $1 billion. Today it’s almost $3 billion thanks to a strategy that not only turned a profit, but also turned City Hall into Vancouver’s largest landowner and developer. And it helped finance countless worthy amenities, including thousands of social housing units.
If the whole Olympic village deal turns into a dead loss — an almost inconceivable outcome as it would mean zero value for hundreds of new waterfront condos — the upshot, he said, would be that the fund’s profit over the last 15 years would total just $500 million instead of $1.5 billion.
A more realistic risk, he said, is that the current slump in condo prices and sales could pare the fund’s 15-year profit from $1.5 billion to something in the range of $1.3 billion.
“And how many cities would just love to have that problem?”
Still, I noted, some critics argue that governments should not be involved at all in the business side of development. He responded that, if this were the case in Vancouver, the city could never have accumulated the huge endowment fund it uses to finance its big projects.
Sullivan also argued that, when the Olympic village costs are tallied, it’s unfair to count all of the roughly $300 million the city invested in site preparation. This included not only things such as roads and utilities, but also shoring up the land itself so it won’t slide into False Creek.
The Olympic village, he said, will occupy only about a sixth of the developable land that benefits from this work. So this cost must be apportioned to future projects, as well as the one under way now.
Sullivan noted that he no longer has the benefit of briefings and research from city hall staff, and
he didn’t know why — if the picture is still essentially rosy — the city’s credit rating has been put on watch by one agency and down-graded by another.
“One reason it was so high in the first place was the Property Endowment Fund,” he said.
And now, “Maybe it’s the headlines. They [ratings agencies] read this stuff, too.”
But he returned again and again to the quality of the development — the 50-per-cent parkland, the mix of market and non-market housing, the quality of amenities, the completion a 22-kilometre walking and bicycle path — to underscore his faith that the Olympic village is near-certain to turn a profit over time.
And the endowment fund will also be an asset long into the future if it’s managed properly, he said.
“Most cities cannibalize their land holdings and use them to subsidize taxes,” he said. “If our city councils continue to have the discipline to protect these assets, we’ll have future city councils that are able to do equally impressive projects.”
[email protected]
© Copyright (c) The Vancouver Sun
Finally some decent reporting about the Village....only 4 weeks too late, the damage has been done.
Prev
..... what more can i say.
Linear Mode
