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.