Some confusion is still swirling around the news the city released Friday about the assets it has recovered from Millennium Developments, the loss it has said it is likely to declare, and more. There’s too much information to digest all at once, but here is the city’s PowerPoint and here are the highlights as I see them.
– In financial statements to be issued April 21, the city will declare a $40-50 million write-down (exact number to be firmed up by then) of its Olympic village debt. That debt, as of April 1, was $579.5 million on the construction loan and $178.4 million owing on the land.
– As I read it, that means the city expects at this point to get back all the money it needs to pay off the loan that it borrowed from elsewhere (at 2.5 per cent interest) but will not get the full price it expected for the land.
– That $40-50 million is attempting to take into account everything likely to be paid out to the receiver, to be paid out in interest, to be paid out to fix deficiencies, but there are no firm numbers attached to any of those yet.
– It also takes into account the fact that the city has now taken over all Millennium assets that were originally pledged as security that are actually worth something, estimated at $56-70 million. It hasn’t bothered lining up to get money from three properties because they’re judged to be underwater — mortgaged for more than they’re worth: the Evelyn Drive property in West Vancouver, the numerous parts of the Hermitage development downtown that Millennium still owned, and a small Whistler condo.
– However, the city is now the proud owner of the Province building, some large blocks of assembled land in West Van and North Van, a property on Pender and some key properties in Burnaby, including the current FedEx site that has been rezoned for a residential tower. It also has a $5-million “mortgage” on the controversial Alexandra building in the West End. If the building makes enough of a profit to pay off its two other lenders first, the city will get that $5 million. Expect people who didn’t like the STIR program in the West End to be deeply suspicious about that.
– The receiver fees aren’t known. CBC had a story saying they are running at $35-50,000 a month and extrapolated out from that to $8 million if that continues for the three years Bob Rennie has said it might take to sell off the whole project. A representative from the receiver said their normal fees (which I understand can go up to $630 an hour) are being discounted 15-25 per cent from standard rates. Presumably rates will go down somewhat as the project moves along, although receiver fees on major projects are never small.
– We don’t know how much the city is going to spend to fix deficiencies, because the receiver and city will try to recover as much as possible from warranty and insurance programs. As well, some problems are being fixed by the contractors at their cost.
– The receiver has rented out 22 of the 127 condos that were originally intended for sale and then were slated for rental, in order to get the village populated. Because the sales program seems to be successful, no more of those condos will be rented out.
– 118 condos are considered sold, as buyers have now passed the recision period.
Happy to take questions, but some are not answerable yet.