That property tax guess must be a real guess. On most units there’s no way the taxes are that high, and his guess is at least off by a factor of four.

Now about the plan he sets forth: If we’re talking about moving social housing elsewhere then we should figure that out before we start selling the olympic village stuff off. It seems hard as hell to get any sort of traction on social housing currently and so I’d be hesitant to cancel current plans. Would it be just as or more expensive to sell this existing housing and buy and build more somewhere else in the SE False Creek?

Real estate analysis is not the only kind of analysis that matters on this site. So, I will piggy-back on Geller’s analysis to offer a few asides on how decisions made in planning and financing of the OV can be seen to have direct effect on the quality of the resulting urbanism…

“5.1 The initial decision to offer the site to one developer. It was too many units for any one firm to build and market in an effective way.”

The choice of building type is crucial. An urbanism that builds out one lot at a time, versus one block at a time—or in the OV case, one quartier at a time—can involve a greater number of builders. These firms will be of various sizes, involve different consultants, and generally spread the work around.

The principal determinant of building size is not density, but building type. Whether we will choose fee-simple (free hold) or strata buildings to achieve the intensification of Vancouver’s neighbourhoods will ultimately shape the kinds of neighbourhoods we get, and how safe we feel on the streets.

Not being under “one controlling authority”, the need for a more transparent and explicit urban design plan will provide a level of scrutiny in the planning stages of the project that the OV never had.

If the OV was to have been planned and built as a pilot project or model for the intensification of neighbourhoods city-wide, the idea of getting one firm to do the whole quartier would have been ruled out a priori.

5.2 “… their decision to build very high end units”.

Not only the units are high end, but cash is strewn about in every detail you care to examine on site, right down to those birds best seen driving at 30 m.p.h.

Good urbanism relies on a completely different approach. Paying the most attention to human needs, robustness of construction, and longevity with low maintenance.

However, Michael reaches right into the gut of the best urbanism in our English tradition when he turns to talk about “fettered ownership”—I had never heard that word before—to “… enhance affordability and broaden the community mix.”

These effects could be magnified by having co-ops and non-profits own the leases.

In the examples of the West End of London, for example, the leases “retired” after 99 years, and the buildings and the land returned to the estate of the original owner. In the UK buying lease-hold property is every bit as common, if not more, than buying free title. One thing I kicked myself about when I sat down for a conversation with a real estate agent that the Prince of Wales highly controversial Poundbury, Cornwell, was forgetting to ask whether the properties were lease hold. I assume they are and that the agent took it for granted that I understood that point.

The only draw back to lease hold is that in the retiring years of the lease, the last 15, 10, 5, etc., it becomes very difficult to maintain the property since they will soon revert to the original owner.

However, there is an attractive consequence. In 99 years, a different generation of Vancouverites will “inherit” what will be ten decades from now even more central and valuable land. The buildings, we can be quite certain, will be in fine shape and ready for re-use if so mandated.

Michael puts his finger on a darker reality of urbanism, here:

“My other concern is that the income and social disparity between the potential social housing residents and the residents of the market units is too great… The current proposal will not only reduce the value of the condominium units, it could result in a less than desirable community.”

On of the driving forces behind “location, location, location” is to price less desirable elements of society out of the neighbourhood. Urban form has a proven tract record of delivering high end neighbourhoods and slums.

My principal disappointment with the OV was that it used the public trust to build a gilded quartier of no use as a model for the city as a whole searching for a way forward.

My other concern is that we may have not seen the bottom. Financially, the real problem is underlined in a conversation I had today at Granville Island Market with a couple visiting from Florida. Their question?

“How come housing prices in Vancouver are so high?”

“One irony, by the way, of this discussion and the media storm about the village is that the more it gets hashed over in public, the more the financial problems are exacerbated. ”

So we should all just STFU until Rennie unloads these turkeys on greater fools.

The problem isn’t that people are gossiping. It’s that you are trying to sell for 1Million something that rents for 2K a month.

That’s just not going to work. If you need a 7 % cap rate, your 2K/month rental property is really worth about 350K.

Do some numbers on those sale prices. Are those the prices today? Likely not. But 2013? What’s stopping that from happening?

Mr. Villegas and Mr. Geller. Two great points of view presented herein. Would love to have you two do a debate of this issue on TV/Radio.

For all Lewis’ (an arms length SFU academic) wisdom and Michael’s (a retired arms length CMHC bureaucrat) reliance on post-occupancy surveys, which BTW only reflect peoples’ fear of rocking the boat and ignorance of alternatives . . .

VHP 5 is right . . . “So we should all just STFU until Rennie unloads these turkeys on greater fools.” . . .

Because it doesn’t get better than this and for all our gossiping the sooner we unload the market units and keep the social (as the mayor said. “they’ll be ready before Christmas“) the less us provincial tax payers are on the hook . . .

If Lewis and Michael want to persist in chattering and deluding themselves and if Bula-blogistas want to go along for the entertainment . . . then IINOOB . . .

Tiktaalik // Oct 3, 2010 at 8:46 pm

“That property tax guess must be a real guess. On most units there’s no way the taxes are that high, and his guess is at least off by a factor of four.”

Thanks for this, since you reinforce the point I was trying to make. Firstly we need to ensure that the property taxes calculations are considered in any decision; and secondly we need to ensure we have the right number.

While I admit that my guess is just a guess since I do not know the average price of all the unsold units, I do know that you are definitely wrong.

You can find the property tax information on-line at http://vancouver.ca/fs/budgetServices/taxrates_2010.htm

One fourth of $7,000 is $1,750 which is the property tax on a $240,000 unit. I don’t believe there are any units remaining to be sold at this price.

My guestimate was based on an average unit price for the remaining units of $1.6 million. While this seems high, I am advised that about 1/3 of the unsold units are currently priced over $2 million, and most of the remainder are between $1 and $2 million. Now I realize that the final assessed values will likely be lower, but the annual tax increases, based on the last few years could be higher.

My key point is let’s do a reality check on all the numbers, especially the ongoing costs associated with the social housing units; and the feasibility of renting out all the unsold units, particularly since one councillor has been quoted as saying Council is being told this is a viable alternative worthy of consideration.

Very insightful commentary.

It is obvious the cacophany is like a boisterous orchestra tuning up before a second command performance. The first was for the Olympics. Then a worldwide financial crises truck during the intermission.

Now the city can afford tell the IOC to go stuff themselves and hire more than one outside opinion as to how to deal with the OV issue independently.

It may be advisable to not to give a lot of credence to those who would manufacture a crisis out of this smoldering pile. The city can afford to take the time to think it through and make the right decisions. That may require putting political idealology into a container and refining one’s skills in listening to divergent views, focusing on financial management.

I think the urbanism of the OV is already a major step in the right direction. But I don’t believe — as much as I’d like to — that the Condominium Act will be repealed anytime soon. These are strata’d luxury suites, and they must be dealt with as such.

And I’d suggest the OV Quartier should NOT be treated as a stand alone “unit”. It is a new form of urbansim that underwent extraordinary pressures. The entire SEFC consists of many Quartiers, many of which will no doubt contain the income mixes desired by the most optimistic political measure, but in all practicality would reside adjacent to rather than within the OV site.

@ MB 13. Your perspective touches on an important obstacle in this debate. The current Vision & COPE Council members are committed to keeping the social housing on the immediate OV site. It seems to me if a resolution of that issue can be achieved we may be able to then follow Michael’s recommendations.

So, let’s start the process by getting consensus from all sides that the number of units of social housing will remain a given. The question then is where they will be located? I think we can also get consensus that the 1st priority for those requiring social housing is not ‘location, location, location’, it’s ‘roof, roof, roof’.

Given the unfortunate sequence of events the evidence today is overwhelming that keeping those units on-site will have very serious consequences to the financial viability of the whole OV project. Given that, it would be prudent to consider other locations for those units. There are probably 3 options: on adjacent sites which the City may own or, on City owned sites in this neighbourhood or, on other City owned properties in other parts of the City where a win-win fit can be found.

Once these options have been identified & evaluated then, a rational decision can be made as to where that housing is provided. Funding for these units would come from the sale of the converted OV social housing units. If there were to be additional funds available after the OV dust settles perhaps even more social housing units could be built. What a bonus that would be! Perhaps this dark cloud can have a silver lining.

Obviously the feasibility of such a plan needs to be confirmed. Perhaps the 1st step to healing this festering sore would be to confirm same.

I just read Ian Reid’s posting in the Vancouver Observer, and felt compelled to respond. Again, he wants to ensure that NPA is blamed for the current situation when the next election comes around. Here is my response to that.

Ian, I did not sit around the Council table or at the ‘in-camera’ meetings so I hesitate to comment on your post, since you obviously were there. However, I do want to offer a couple of thoughts:

1. While it may be tempting for some to want to continue to treat this project as a ‘political football’, at some point soon we need to stop, if only to try and minimize the project’s notoriety and potential financial losses.

2. That being said, I think it is useful to discuss just how much we should blame any politicians, regardless of their political stripe, for accepting the advice they receive from their planners, lawyers, real estate department, etc. on the matters brought before them.

3. To help explain my point, I have a daughter working in a hospital. When I talk with her about apartment lease agreements and market rents, I feel quite confident. However, when the topic switches to internal medicine and whether the brown mark on my face might be cancerous, I tend to believe she knows a lot more than me, and I’m ready to take her advice. And she’s only a fourth year medical student!

4. At the 2008 Webster dinner, I asked one of the Vision councillors who was sitting in on the ‘in-camera’ meetings whether she fully understood the implications of guaranteeing the Fortress Loan. Her response? “What did I know. I’m a biologist.” I admired her for her frankness.

5. However, the fact remains that it wasn’t the NPA that made these decisions. It was 11 decent people representing different political persuasions sitting around a table being asked to make decisions about something they knew very little about. Had they been private sector real estate experts, they might have disagreed with the advice they were getting and refused to guarantee the loan, and instructed their lawyers to modify the terms of the land lease, and asked their mortgage broker to bring in another lender. But they weren’t experts, and they had to rely on the advice of their staff, who were not necessarily NPA or Vision or COPE supporters.

6. On my blog http://www.gellersworldtravel.blogspot.com I have outlined some of the factors that I believe got us into the current situation, and some suggestions as to how to minimize our losses. In reviewing the items, I would invite you or anyone else to tell me which of the decisions was really politically charged, as distinct from what appears in hindsight as bad judgement on the part of a developer, his marketing advisor, city staff, the lawyers, the architects, etc.

7. The fact is, neither Kim Capri or Elizabeth Ball or any of the other 5 NPA councillors or Mayor at the time was guilty, in my opinion, of crass political gamesmanship. They were doing what they thought had to be done at the time, in order to ensure that the Olympic Village was completed on time, and to avoid the embarassment of nowhere for the athletes to stay when they arrived. And given the events of the past week in Delhi,I think we can now appreciate why they probably did what they did.

8. Since you appear to be a ‘political animal’ I can understand that you see the chain of events in political terms. I am an architect and developer. I see the project’s history in real estate terms. All I ask is that you consider that there is a ‘non-political’ explanation for what transpired, even though there were politicians involved in the decision-making.

Mister Geller is totally wrong on at least two counts.

In point 2, he falls for the sunk cost fallacy. The cost of the building doesn’t matter anymore. It’s already been built, and you can’t do anything about it. The city need not worry about it anymore. It should worry about maximizing its revenues from now on.

In point 3, the lost tax revenues aren’t really lost. Landlords pay property tax, and the rents reflect that. The city will rent the units out for as much as they can, which is the same that a private landlord would. The proportion of rent that would go to property tax still goes to the city.

Tiktaalik, thanks for your forthright response. You are correct in observing that taxes can be lower in the first year since the assessment does not reflect the sales price until after closing. I did not consider the homeowners grant since it is eliminated on homes assessed at $1,164,000 or more. However, you are right in pointing this out since it would apply to some of the properties. It doesn’t put anymore money into the city coffers, but it helps when comparing the financial implications of selling or renting.

Michael Geller posted above his response to my Observer article. And here’s my response, also found on the Vancouver Observer…

…Michael, I am a political animal, but I like to think I’m not a fool.

I agree that the previous council relied on advice that in hindsight looks very poor. But a few things about that: Not all councilors relied on all the advice all the time. There were important moments when the Vision Councilors voted against what turned out to be poor options.

It’s also unclear what was presented to whom. Vancouver has a party system almost unique in Canada. Councilors caucus in party formations and we both know the majority caucus often gets more information than others. The four Vision members, including the bioligist, have also said they didn’t get all the information that the majority caucus got. I believe this mitigated against good decision making through this period.

Finally, one of the issues is the fine line between following bad advice and recognizing bad advice and asking for better. The KPMG report outlines several key decision points where the due diligence was inadequate through 2006 and 07 – for example was the $192 million a realistic price, or; could Vancouver rely on the quality of Millenium’s financial partners?

I actually agree with much in the memo you have circulated. In that you suggest that the due diligence must be done going ahead. If that approach had been taken in 2006/07 we might have had a different developer, a different development and a better looking bill.

Looking forward the point seems to me to understand the mistakes of the past, not to repeat them and to demand better of both the advisors and the politicians.

The council and city also need to recognize that the development community (Rennie, Wall and many more) are now conflicted.
They have many competing projects now and a fire sale or price reduction of the OV will impact them too and hurt sales on their vested interests. This is not about HST or politics. It’s, as always, about supply and demand.

And the idea that you move rents down to a level where the financials make sense is a little naive. They need to move the rents down to a level where the properties will actually rent! It does not matter what the rent is if it’s sitting vacant. Based on the article in the Province this weekend (great advertising…), who in their right mind would choose to rent there anytime soon? A premium price for what appears to have a lot of problems.

A lastly, the whole LEED thing. Wow. What an altruistic way to burn money. Did anyone measure the carbon footprint of burning that much cash on a stamp that so few are willing to pay for (especially renters…)? You could feed 1000 people on the DTES for a year (or for a decade in an African village) or spend the money just to pee in a rainwater filled toilet. Talk about not seeing the forest for the trees.

rf 25 re: …the whole LEED thing…
Even in our throw-away culture, buildings are generally around for at least 60 years. Why would you call heating and cooling systems which save so much energy cost that they pay for themselves within 20 years, “an altruistic way to burn money”? Those features will be subsidizing the building for the next 40 years – most of it’s lifespan! What about the value of tonnes of waste that didn’t go into landfill, the use of local materials, the recycled products, the materials selected for healthier indoor environments?
What’s really crazy is the way we “normally” think about buildings – almost exclusively in terms of initial dollar cost – as if the only thing of significance is the initial money spent to build the place where thousands will live for at least 60 years.
LEED is a tool that can be used to guide development of socially, environmentally and economically cost effective buildings – or it can be used to help make $2,000,000 condos better, but we need to look elsewhere for the reasons why we decided to build so many expensive apartments in the first place.

@ Bill

With regards to Ian’s allegations that Vision councillors didn’t get the same info as NPA councillors. I agree. What a lame argument.

Ian, please produce your evidence that will justify that statement. Since this was a complicated deal, I assume that the usual stacks of info packages and backgrounders that are usually prepped for council meetings were put together and submitted to finance committees and then to all councillors.

Let’s treat Vision councillors with the same consideration given to NPA councillors on this issue. In other words, they all need to wear this…

I am going to guess that

I applaud the point that the more fraught the discussion becomes, the more the value erodes. For me and my husband, the debate isn’t theoretical: we live at Olympic Village, giving it a try in a market rental directly overlooking the empty city owned buildings. So far we love it, for a host of reasons: the seawall connection, the spectacular outdoor architecture, the stunning Creekside community centre, the overall good design, the beautiful pool and fitness club. And when local stores open, we’ll be walking to do most of our shopping, just as we did in Coal Harbour once it matured (Urban Fare, London Drugs and a wine store cover a lot of ground). Overall, the place largely lives up to the green promise. I’m no urbanist, but living here feels pretty good to me. On weekends, swarms of people are still filing through the show condos. Many, I think, are waiting to pounce.

The commitment to social housing made here was admirable, but under the changed circumstances the City should seriously consider the proposal to sell at least some of these units and shift that commitment to cheaper land. Selling these units would absolutely not dilute the value of the for-sale condos; we are talking about totally different buyers–the quality of finishing, appliances, amenities and even the location of the rental buildings is far lower. So if the prospect of social-housing neighbours is in fact discouraging high-end purchasers, then selling those units would presumably encourage them.

Affordable leased-land ownership also addresses a dire housing need (albeit for a more prosperous demographic). And it would quickly animate and diversify the neighbourhood in a sensible and, for the City, profitable way. I’m not saying this is the way to go, but it would not hurt Millennium’s sales and just might trigger a bit of momentum.

Not sure how the City would deal with political fallout from those not mollified by a social-housing equity transfer, but that isn’t a good reason to pass on the Geller proposal.

And I must say, it seems all too typical to go negative about new areas at first–in 1978, I turned down an espresso stall lease at Granville Island, unable to imagine anyone ever going there.

Living here, our main hope is, whoever the future residents–subsidized renters, market renters, ownership, or a mix of all three–that they all contribute to quality of life in a great new area that all of Vancouver (trust me on this) will soon be boasting about.

I would add to my previous post that the Olympian deadlines imposed on Millennium — as well as other Olympic-related projects — added a premium to the final price.

These were truly exception circumstances.

I’d take short term ‘objective’ over long term ‘subjective’ any day.

This project is bankrupt without the bailout, and still in the hole with it.

This long term talk comes from the same types who cry bloody murder when the stock market goes down sharply and stop thinking long term.

It’s all about now, until it’s their pet project.

Environmental standards and planners set standards for a development project to meet – it is a challenge issued to the developer / architects / engineers to find means to achieve those standards. The development team can choose to use status-quo thinking and simply add expensive features to standard designs, or they can take on that challenge in earnest and try to exercise some some real innovation.

The standards ask that energy / water be used more responsibly – if the developer / architect / engineer chooses to accomplish this through expensive means, then they bear the risks associated with those costs (which inevitably becomes the burden of the consumer). Granted current building codes and regulations (which are the pervue of government and perhaps should also be revisited) may limit some creative solutions, it’s my opinion that most project design teams out there choose the easy way out all the while complaining about the ramifications of their own choices.

You won’t find developers citing their own choice to install luxurious finishes as a contributing factor to excessive costs in an over-priced project, especially if there’s someone else they can blame.

When you walk around the Olympic Village start paying very close attentioin to the details. They are costly. Look at the plaza -reportedly costing over 5 million dollars. Look at the excess of the shoreline design which is extraordeinarily expensive.

They don’t magically appear. They are thoughtful decissions made by planners who have no accountability for costs.

Look at the inefficient single loaded mid rise concrete buildings dictated by planners. Look at the social housing requirement. Look at the landscaping. Look at anything but the selection of the cabinets and appliances and you will find the guiding hand of a planner. To say they are not responsible for costs, even putting aside the heated construction market at the time, is not to understand the profound impact planning had/has on development costs.

Yes, the planning department does shoulder a big part of the blame for the mess we find ourselves in.

Thank you Heather Prittie. I very much appreciated your comments and do hope many others take the time to read them.

@ More Be Us …. dead on!

@ Oh My …. The OV debt did not result from the planning of the seawall, the community centre, the shoreline treatment or the plaza. My understanding is that these superb public assets were financed in advance from an existing pool of density bonus funds.

The debt resulted from the bailout of the private developer of the athlete’s residences (which became private suites) after his bank pulled out.

The two are not related. Your grudge against planners seems personal.

Are people actually falling for Heather’s comments as anything but spin?
Ask her how many times her or her husband have subcontracted for James Hoggan and co.
Ask her how close she is with Mike Magee.

She is a Green religion Public relations and communications consultant and [remover for unsubstantiated allegation].

I highly doubt she is objective.

MB, I have no grudge against planners my husband is one. The bail out would have been less if not for the extravagance layered on by planning staff. The two are absolutetly connected.

Interesting! But we have very poor planners in ‘couver. Why is it so hard to increase supply? All the planners here do is seek to decrease supply. How much graft are they taking?