My longtime colleague Gary Mason had a story today in the Globe and Mail about financing troubles for the developer building the $1-billion Olympic athletes’ village. It set the political circles here into a tizzy, since clearly this could become an election issue.
I’ll have a follow-up story tomorrow, after talking to developer Shahram Malek from Millennium and the city’s real-estate manager Michael Flanigan. In case anyone is wondering whether to move out of town or pull their money from municipal bonds to avoid bailout costs, I should point out that there hasn’t even been the faintest whisper of bailout talk.
What is under discussion is whether the city might guarantee a new loan to Millennium from its lender to cover contingency costs. The city wouldn’t do that without getting, as any good co-signer does, some kind of security, i.e. some of the condos or something at the village. As long as things don’t go too far south with the world financial markets and Vancouver, that would probably be relatively painless.
However, if true (and at this point unbelievable) disaster struck – everyone stopped buying condos point blank, Millennium’s lender went belly up, Millennium went belly up — the city would be stuck with some product it couldn’t sell immediately. But think of the upside: it could make those units available for affordable housing.
By the way, for those who think the Depression was only a bad thing, the city is as financially healthy as it is today because it got control of all kinds of land when people went bankrupt in the 30s. That’s where our $- billion property endowment fund started.
I’ll be posting more on this later, as it’s the kind of story that never really ends.