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Olympic village by the numbers: $466 M still owing; 304 condos left to sell; more

October 18th, 2011 · 41 Comments

City manager Penny Ballem gave an update on the Olympic village numbers today, which was sort of helpful but still didn’t answer some of my questions. However, here’s her slide show, to get us started.

As many of you know, development consultant Michael Geller and I have been having a back and forth about this whole issue, as he says the city is going to lose a lot of money that it didn’t need to because it has insisted on hanging on to the 252 city-rental units, to the 119 other rental units that were always planned to be market rentals, and by pushing the developer into receivership, taking over the whole loan and sales program in the process. (I think I have that right.)

I’ve asked him to set out the numbers for the two scenarios, so that we, the taxpayers, can see the difference in losses between the two.

Michael’s tweets today say that he believes going his route (sell everything off right away) would have saved the city $100 million. Since he calculates the losses under the current direction to be $270-$320 million (including the foregone profit on the land? I can’t tell), that means his way would mean the city would only lose $170 to $220 million. I think. He also said at another point that his method would generate enough income to pay off all $446 million of the loan plus get back some of the $170 million that the city was supposed to get for the land but never did. Anyway, we’re still working on this.

The critical numbers needed, however, are this. Numbers people should feel free to weigh in. Let’s have a real math nerd-out here.

1. What could the 119 market units and 252 city units have been sold for?

2. What is the city getting in rent from those units over the life of the building?

3. What is the net revenue from that, less maintenance, management and holding costs?

4. What are the 304 remaining condo units likely to be sold for?

5. What are the rents on the commercial spaces likely to be for the life of the building, less the maintenance, management and holding costs?

6. What are the costs of repairing deficiencies etc that aren’t covered by the Maleks’ or their contractors’ insurance programs, which need to be factored in.

7. What kind of impact would it have on the sales prices of all the units in the village — the 500 original for-sale condos; the 119 market units; and the 252 city units — if all of those had been put on the market at once? Could you really have sold them for the same kind of price as units that are pre-sold before the developer has had to start carrying costs? Would there have had to be a discount? Would you have had to carry them over a period of one or two years before you could sell them all? If so, what would be the holding costs on that?

Categories: Uncategorized

  • Thanks for the offer

    When we’re talking about Michael Geller, we’re talking about the same guy who calls poor people ‘D’s and ‘E’s, and then acts surprised when people are offended?

    And who has waged a one-man crusade against the Village over the past year, telling anyone who will listen, and every week on Bill Good, how no one will buy there because of all the DTES folks who were supposedly moving in?

    And this is who the city should be listening to for advice on how to build a new neighbourhood in Vancouver?

    That’s ok, thanks

  • Richard

    Gellar’s numbers are getting really tiresome. One can always sell off social housing at market values and gain more money. What he is forgetting is that social housing was one of the promises that the city made while convincing people to support the Olympics. If it were not for the the commitment to social housing, there would have not been the support required for the Olympics to go ahead.

    Now it is unfortunate that global greed lead to a financial meltdown that lead to the Olympic Village not being the cash cow that many people thought it would be but that is definitely not the fault of the less fortunate in our city.

    Bottom line is that we made a commitment to include social housing in the Olympic Village. It is our responsibility to fulfil that commitment.

    Lets strive to be a city that keeps our promises even when the going gets rough.

  • Roger Kemble

    Well God bless you Richard @ #01 for pointing out the obvious.

    The bird brains will have their say.

    Now that the Chinese are being hit (God knows how many billions owed to them by Obama et. al. never to be paid back) they are feeling the pinch and as the dominos collapse Vancouver’s FIRE economy is about to be dowsed.

    Expect this conversation to go on and on and on and on, nothing learned: Geller and Mezzanine steadfast as ever . . .

    Where have all the flowers gone?
    Long time passing
    Where have all the flowers gone?
    Long time ago
    Where have all the flowers gone?
    Girls have picked them every one
    When will they ever learn?
    When will they ever learn?

  • Jason

    It would be lovely, if rather than ignoring the facts and gripping to ideology, people like Richard faced the truth:

    1) the global meltdown is the cause – last time I checked our real estate was not only some of the most expensive in the world, but continues to go up. Vancouver house prices dipped in 2008 and then shot back up, well beyond the pre 2008 numbers.

    2) that selling off social housing at OV means no social housing – gellar and others are suggesting a solution to the giant hole the city has gotten itself in…by selling the Olympic village units the city cuts their losses significantly. Why we keep talking about the need to provide social housing in some of the most expensive real estate in the city is beyond me….reduce the losses and then reinvest in social housing in cheaper areas (even Granville island…which is still a high end, beautiful area, would be substantially cheaper). By paying for rolls Royce social housing, you’re reducing the funds available for quality “BMW” level housing

    The OV has been a disaster from the get go…cut our losses, get out, and then look for cheaper social housing solutions in cost effective areas of the city

  • Mark Allerton

    @Jason

    If the global financial crisis had not happened, even if the OV were a financial disaster, it would have been a financial disaster for an American hedge fund, not the City of Vancouver. That seems like an important difference.

    As for “cut our losses and get out”, you talk like the CoV invaded Panama instead of SEFC. It’s not like we can sell the OV to some other city, we have to live with it right there in the heart of Vancouver. Are you sure you want to live with the consequences of the cheapest possible course of action? If so, remind me not to buy a house from you.

  • Chris Keam

    Jason:

    Which cheaper area is available that has no NIMBY neighbours to fight social housing at every step, is still relatively close enough to the services people need to get back on their feet, and has the available land?

    Respectfully, this alternative approach you are suggesting needs some additional details before one make a judgement as to the suitability and cost of any Plan B.

  • Chris Keam

    oops, ‘can’ make a judgement. Still on my first cup of coffee.

  • Hugo

    Here is a better question BOTH the NPA and Vision voted for and created the situation we have now so who does that leave us to vote for?

    I am just waiting for Anton, the angry old lady in the pant suit to show up and start screeching and taking both sides of this issue and then asking for an inquiry or study

    I’m back to staying home this election

  • rmac

    Is Randy Helton a viable candidate for mayor or is he just wishful thinking?

  • david hadaway

    Hugo, is it being angry (for which she may have good reason), old (which she isn’t but which will even happen to you if you’re lucky) or a lady (which she is, incomprehensible though the term may be to someone who is not a gentleman) that is your problem?

    I just see that as cheap shot that says a great deal more about you, and others who follow that route, than about her.

  • Richard

    @Jason

    Except that people need housing now, not four or five years from now which would be the case if the city sold the social housing at the Olympic Village and used the money to build new housing. You need to factor in the social and other costs of delaying badly needed housing by that long.

    Anyway, the question now is academic so lets move on. People have already moved in. Lets focus on creating more social housing rather than continuing to debate what has already been decided.

  • Andrea C.

    Response to rmac:
    I was actually going to sit this election out, a depressing first for me.
    Judging by the comments on a recently posted Georgia Straight article, I’m not the only one who felt this way. NSV has a very detailed statement of priciples/platform on its website – nsvancouver.ca. I’m not looking for panacea or perfection, I’m just grateful there’s an option for me out there. I was feeling a bit “indirectly” disenfranchised before.
    David Hadaway: This is OT (oh, please make this ON T in a future post, Frances), but have you seen the design for Westbank’s rezoning at 601 Main St.? What an utter atrocity!

  • jesse

    Based on $446MM loan and 304 units left to sell, 300K sqft, and $500/sqft average, it looks like a $300MM shortfall. If remaining assets liquidated including all rental/social housing, my calculations say that drops by about $100MM, as Geller contends.

    I too am unsure how the land comes into this. If the debt includes a loan to Millennium against the land — in other words the City has in effect mortgaged the land — the City would book an extra loss from the land if it liquidated 100% of the property. @Frances if you can find out how the land is handled that would be great.

    From where I’m sitting it looks like $300MM remaining debt assuming no market condition deterioration. About $175-$200MM of that is unsecured by the remaining assets (adding in a bit for City-held assets like community centre etc.). From a balance sheet point of view the City is likely out $275MM including writing off $100MM for the land it held before this thing got underway.

    Is this about right?

  • Bill

    I think it says a lot that there is more detail on the transferred properties and Bidwell mortgage but than on the condos remaining to be sold.

    Some interesting numbers, though. Millenium sales to Nov/10 averaged $768,000 per unit while the Receiver sales averaged $720,000 so the average has declined. If you take the remaining loan of $446 million by the remaining 304 units gives you an average of $1.46 million per unit. Yes, I realize that there are other assets (like the transferred properties) but I think it is clear that there is going to be a significant shortfall. I can’t believe that City staff have not calculated the likely loss, even if it is a range.

  • Frances Bula

    @Andrea. What’s going in at 601 Main. Tell me more.

  • jesse

    “I can’t believe that City staff have not calculated the likely loss, even if it is a range”

    I agree it’s odd. Sounds like a stall tactic to me. It’s not too hard for a bumpkin like me to estimate a loss spending 30 minutes reviewing the presented data; I expect someone of the caliber of Ballem or others who have been starting at the numbers for weeks on end could do it even faster.

    It should be easy: Debt = X. Estimated revenue from market sales and liquidation of Millennium’s pledged assets = [Y1,Y2]. Estimated shortfall Z = [X-Y2,X-Y1]. Then determine the valuations of the remaining assets Q and you’ve got yourself a shortfall = Z-Q. Or is it “complicated”?

  • Andrea C.

    Hi, Frances:

    Here’s the COV’s link to the rezoning application:
    http://vancouver.ca/commsvcs/planning/rezoning/applications/601-627main/index.htm

    I will refrain from further comment, as I am way, way off topic (apologies to the other posters).

  • david hadaway

    Andrea C

    Funnily enough I was looking at it this morning and have the pdf on my screen now. I wouldn’t object to a big building on that corner, it’s almost a characteristic of that part of Main and what’s there already is no beauty, but this thing looks like a real clunker.

  • Andrea C.

    David:
    Seriously, at that height and mass, a sizeable part of Strathcona will literally be walled off. One of the greatest pleasures of living in Strathcona is walking down the slight incline along E. Pender or Keefer into Chinatown, especially on a sunny day.
    I remember our long-ago conversation when we regaled each other with our “favourite” architectural dogs of Chinatown – the M Channel Building, HSBC, etc. This proposal makes those missteps look like pikers.
    IMO, the proposal is insultingly poorly and cheaply designed. The architect ain’t exactly Henriquez, and it shows. Check out the firm’s illustrious resume: http://www.urbandb.com/company/w-t-leung-architects/
    No website.

  • Lewis N. Villegas

    I recall a recent conversation when it was proposed to me that:

    (1) The OV is proof that mid-rise does not work; and

    (2) The OV was too rich.

    An Olympic Village can be a bi-polar affair. On the one hand, the sponsoring agencies may feel the heat of the international spot-light. Think Beijing and London. Those are big-stakes summer Olympic sites, but the lessons are roughly the same, but scaled up.

    On the other, many Olympic Athlete Villages flirt with the idea of building an ‘ideal site’. A kind of (sustainable) demonstration project.

    Working under the banner of Designers for Social Responsibility, a group of us wanted the OV to be a kind of laboratory for testing options of the kinds of buildings, streets, and public open spaces that could be used to transformed Vancouver’s Historic East End—Chinatown, Japantown, Strathcona, the so-called Downtown East Side or DEOD, Railway Avenue and the Vernon Drive District—into a socially, economically and environmentally functioning neighbourhood(s) without giving it all away to gentrification.

    We believed then—as I do now—that there is shaping force in the urbanism that will support social functioning in a way that would play to the Olympic Gold.

    In other words, we hoped that the Village would hum with spirit during the games; then hum as a local quartier right after the games; and continue to do so for decades and centuries to come.

    It is the timeless dimension of urbanism that is called into question by buildings that are too tall for the quality of the fronting public space (at the Olympic Village Square and Walter Hardwick Ave.); or by spaces sorely lacking in definition like the waterfront and the gravelled over 1st Avenue, or the water fronting Athlete’s Way.

  • mezzanine

    re: 601 main:

    i’m no architect, but while this building is no woodwards, i wouldn’t say it’s not up to par with other condos in vancouver. If anything, they made an effort to set the tower some ways back from main st so the podium blends in more, compared to say, the quebec side of citygate, where they built podium detailing, but had no setback (google map: http://g.co/maps/3ctuh).

    what’s there already is no beauty

    – i agree, just multiply that by 100. in spite of being at a busy intersection with a busy bus stop, that site is a black hole of activity, covered by a 1980s faux-asian-tile-roof.

    i miss the store selling bootlegged asian films though. 😛

  • brilliant

    @Chris Keam 6 You could start with the Marine Gateway site that Vision decided to toss to a market developer instead. Can’t wait till those new homeowners get a whiff of the transfer station on a warm day. As Barnum said, there’s one born every minute.

  • Bill McCreery

    @ Lewis 20.

    “… buildings that are too tall for the quality of the fronting public space (at the Olympic Village Square and Walter Hardwick Ave.); or by spaces sorely lacking in definition like the waterfront and the gravelled over 1st Avenue, or the water fronting Athlete’s Way.”

    Interesting observations, I agree. And having known and worked with Walter Hardwick, I believe he would not be happy having this poorly scaled street his sole legacy in Vancouver. He deserves far better.

    After months of speculation that the OV losses would be anywhere from $50M to as much as $230M when the land loss is included, we now get an admission from none other than Geoff Meggs that, oh my gosh! It looks more like $270M.

    I did rough calcs last June, I think, and when all the different components are factored in my total was a $288M loss, and that may or may not have included an amount for the interest carrying costs. This is another missing piece of the pie the City has not wanted to share with us.

    Let me tell you a developer knows what his/her carrying costs are on a monthly if not weekly basis. And a developer also knows on a monthly if not weekly basis what all the costs are.

    If you take your eye off the ball you don’t survive. And to be political here, Vision ignored this project until after the Olympics. They should have had all the ducks in a row so the OV could have been occupied the month after the Olympics were completed. Unfortunately for Vancouver taxpayers they only got around to tendering the social housing contracts in June, 4 months later. That’s where a lot of Michael’s $100M has gone.

  • George

    @Jason& Micheal Geller
    Your idea of cutting the losses and selling the OV units, reinvesting, then building social housing in a different area actually makes sense for several reasons.
    If we get realistic, is this location actually affordable for residents of social housing to live and actually thrive?
    The first thought I had was where would low income people shop..we can’t afford Terra Breads or Whole Foods or whatever shopping will locate to the area.

    It becomes difficult when the closest convenience store is priced higher due to it’s address.
    It becomes an unhappy living arrangement if you can’t shop in your own neighborhood..

    Even the cost of the “Green” innovations are beyond way most low income earners can afford. The extra charges on the utility bills are already causing concern for the social housing residents.

    I think the idea of the legacy in theory, was a great idea originally, but now I believe, it is just not workable, for many reasons..practicality and affordability being two of the biggest.

  • ThinkOutsideABox

    The first thought I had was where would low income people shop..we can’t afford Terra Breads or Whole Foods or whatever shopping will locate to the area.

    H E L L O

  • Joseph Jones

    Andrea C #19: WT Leung, one and the same, bringing a 12-storey wall to 2667-2703 Kingsway, to loom over the existing single-family homes on the other side of the back lane. Norquay encore. The outer boundary of human scale at 6-8 stories was just not enough for those developer-funded Visioneers. And that massive pile will generate a miniscule CAC of $105,000 to be sunk into a wish to mitigate the shadow impacts …

  • Richard

    @George

    There is a Save on Foods a five minute walk away on Cambie and London Drugs on site is pretty inexpensive. Chinatown is pretty close as well.

  • Roger Kemble

    This conversation reminds me of the movie (actually from Herman Melville’s novel of the same name) Billy Budd . . .
    http://www.youtube.com/watch?v=UgTTV78SmbQ
    . . .
    where, as a mutiny is broiling and poor Billy is about to be strung up on the yardarm, the French appear with the immediate change of concentration. Time for HMS Bellipotent to turn to its original purpose . . . Thu French.

    And so to our original purpose: after all this feckless squabbling, behold, an eight billion dollar (mercifully non-belligerent) shipbuilding savior announced yesterday. That should concentrate the west coast mind for a while, even if not our ineffectual Bula-blogaroos!

    In the meantime, may I respectfully disagree Bill @ #23. I, too, knew Walter, quite well actually and he, being a Yorkshire man like me, would have appreciated the narrow streets very much: especially his namesake.

    As for dumping on social housing, I do not expect to see minds change, not after watching this two-year gossip-fest. But of course it was in the original promise. But more to the point, as I said months ago, if it were dumped it would take years, if not decades, to find other sites, and for the city to get organized.

    As for Terra Breads to be out of the indigents price range, well let me get you all in on a little secret . . . Vancouver’s FIRE economy has done that without OV’s help. If flogging real estate offshore is the only game in town expect the lowest common denominator to rear its ugly head.

    And this is where the OCCUPY movement comes in. For all the petty meanness directed to it here, its purpose is to question, nay dismantle, the financial system of money as debt.

    As for OV’s debt . . . well! Welcome to century twenty-one. Let’s hope the OCCUPIERS prevail.

    At least OV is a legacy, a civic investment, in perpetuity . . . Salt Hall, beautiful waterfront: beautiful public plazas large and small, social housing (if we have the wit to keep it) and rec. center.

    I am not surprised to read all this mean spirited bitterness: a pack of embryonic spoilt brats electioneering, damn lucky to be born in Canada.

    Let’s hope it stay that way!

  • ThinkOutsideABox

    @Richard

    Google maps shows the Save On Foods is 1.1 kilometres away from the corner of Walter Hardwick and Manitoba, and Chinatown is even further away. That’s more than a 5 minute walk and I would consider outside of the neighbourhood.

    An ironic sidenote: Google maps also returns the following message when asked to map a direction, “Use caution – This route may be missing sidewalks or pedestrian paths.”

    Also I’m not sure that I’d be using those two chains to exemplify inexpensive places where low income people could shop without thinking that I don’t have a grasp on the reality.

  • mezzanine

    @TOAB,

    I would agree with richard in that there are ++ options in the local area. chinatown really is inexpensive for food. If you don’t like chinese groceries, SOF is walkable, bike-able, or easily accessed by transit. If you have the reasources, car-sharing is also available. London drugs also has reasonable prices on non-perishables, but also stocks dairy and eggs. the new extra-foods in the old office depot building is comparable to superstore/loblaws and is also a quick transit stop away.

    Otherwise, you can be part of the growing numbers of suburban poor. who would have better access?

    Also I’m not sure that I’d be using those two chains to exemplify inexpensive places where low income people could shop

    ok, where would low-income people shop if not at loblaws, SOF, chinatown and london drugs?

    Are you thinking a walmart supercentre?

  • Everyman

    Frances, were these numbers released by Ballem in response to Suzanne Anton’s request for an accounting, or was this already planned?

  • ThinkOutsideABox

    @mezzanine,

    The Extra-Foods is what I was thinking, but once again, I don’t consider any of those destinations you list to be within the neighbourhood which was the original point that George was making.

    I’m not sure which London Drugs you are talking about, but the one at Davie and Denman does not stock dairy and eggs and the selection of other types of groceries is modest and limited compared to a grocery store. For the same selection, a more reasonably priced solution would be to place a mom and pop type corner shop/vegetable stand within the neighbourhood

    Otherwise, you can be part of the growing numbers of suburban poor. who would have better access?

    Sorry I seem to have missed the point being made somewhere about a false choice?

  • mezzanine

    The LD should be by the OV CC.

    http://www.news1130.com/news/local/article/168515–london-drugs-stays-optimistic-over-olympic-village-future

    Sorry I seem to have missed the point being made somewhere about a false choice?

    I would think it is all about choice. Living at OV in the low income units? deciding if there are close-by stores sutiable for oneself? if taking transit is a rational decision?

    Concept: thinking at the margin
    From an economist’s perspective, making choices involves thinking ‘at the margin’ – that is, making decisions based on small changes in resources. Doing so leads to the optimal decisions being made, subject to preferences, resources and informational constraints.
     [1]

  • mezzanine

    [1] http://yadayadayadaecon.com/concept/thinking-at-the-margin/

    this is a great site, BTW, until they close it copyright violation.

  • ThinkOutsideABox

    Sure, but for those making a choice, albeit limited, there are more options than either living at OV or as suburban poor. That was the false limitation, and off point.

  • Bill Lee

    @Andrea C. // Oct 19, 2011 at 6:14 pm #19

    No one goes to Chinatown nowadays.

    It is ripe for the redevelopment that New West, Mission, Chilliwack etc. did with with their small Chinatowns.

    And that Keefer building (of ex Faye Leung (Pender Realty) of the hats and envelopes of money for Van Der Zalm) is no beauty.
    They had a good HK chain grocery in the basement, and moved the Hastings and Main liquor store there. But the Casino on top and the rest didn’t bring any trade.
    And look at Georgia and Main tower on the east side of Main with parking tower, as well as the Floata/Market parking tower behind it. Similar scale and what will be proposed for all around the ghost-Chinatown that is Bob Rennie’s sad legacy to Vancouver. Towers on stilts, towers on podiums, 2 suites to a floor. See Kowloon and Mong Kok.

    All the banks down there are bad. The HSBC on Keefer at least echoes the Nathan Road and the Queens Road Central.
    I wish that all banks were only 4 metres wide at the street level and allowed the rest of the street to be ‘normal’ retail with banking services on 2nd and 3rd floor.
    Add up the bank frontages in Kerrisdale (before the Trust company consolidation) and East Hastings at Nanaimo, or South Fraser and there is a lot of dead frontage.

  • mezzanine

    Sure, but for those making a choice, albeit limited, there are more options than either living at OV or as suburban poor. That was the false limitation, and off point.

    I still think it’s an important point. George @24 was suggesting that we cancel social housing at OV because of a seeming lack of low-cost shopping options, which would be a msitake, IMO.

  • mezzanine

    mis-spelling mistake.. no more commenting for now….

  • Bill

    @Roger #28

    “damn lucky to be born in Canada”

    Are you sure you are not referring to the “Occupy protesters”? I’m pretty sure that is how a few billion people in the developing world would see it.

  • A Dave

    Rather than Mr. Geller’s “what if” number-crunching scenario (designed to either inflate his “I told you so” ego, or to score political points against a party he opposes), why doesn’t he engage in a financial audit to explain to taxpayers the rapid ballooning of the cost of building this social housing — the lack of accountability and cost control measures under the NPA are surely worth review so that it NEVER happens again.

    How exactly did this social housing project go from $65 million in 2006 to $110 million in 2008?

    Construction cost increases during this period might account for a 10-20% increase, but that still leaves tens of millions of taxpayers’ dollars that seem to have vanished into thin air.

    Someone along the line got very rich off this ridiculously overpriced project.

    I’d like to know who.

  • Dr. Frankentower

    “our “favourite” architectural dogs of Chinatown – the M Channel Building, HSBC, etc. This proposal makes those missteps look like pikers.”

    Is this the first of the Historic Area Height Review “special site” monsters going through City Planning’s “public consultation” process? The frightful faux heritage progeny looks to be an imposing specimen of girth, height and density! I love it.

    I notice at the other end of the block, on Keefer Square, Lee’s garage (heritage) has recently been demolished. We can eagerly expect another dog’s breakfast to be proposed here soon!

    See also the near-finished project on Cordova next to the Bourbon. 33% higher than the allowable heritage limits stretched across consolidated lots, and the result is a monolithic streetwall continuing east from Woodwards. We do so like to hang upside down in dark and shadowy spaces!

    And of course, 5 buildings, including the Pantages, on East Hastings off Main have been steamrolled recently. More condos and imposing streetwalls. Hopefully, the result will be a gruesome bloodbath between the invading Hipsters and the old Zombie denizens!

    And yet more coffins going in on Carrall across from Pigeon Park. With your own private Courtyard of Doom, you’ll never have to visit the sunny park across the street!

    And 4 more towers to come on Main in Chinatown. Come forth and multiply, my pretty Goliaths!

    (I hear the Director of Planning will be dressing up as the Grim Reaper of Vancouver’s Heritage District this Halloween. Scaaary!!)