Olympic Village May Cost Vancouver Taxpayers $875 Million

by Jordan Yerman | January 10, 2009 at 08:12 am

315 views | 32 Recommendations | 4 comments

Cost overruns and other economic factors have swelled the cost of the Vancouver 2010 Olympic Village to $875 million. VANOC already secured a $100 million bailout loan, which will be spent before the end of this month.

Unless Vancouver's city council can re-establish a development loan, the cost of the project could be borne by taxpayers.

The city has been forking out money to keep construction going since New York-based hedge fund Fortress Investment Group stopped advancing funds in September to Millennium Development Corp., Mayor Gregor Robertson said Friday.

The previous city council, Fortress and Millennium signed a $195-million "completion guarantee" in the spring of 2007, Robertson said, committing Vancouver to finish the project.

The house of cards that is VANOC's strategy has never looked more flimsy.

I'm wondering if the city could ask for other corporate supports in addition to the agreement made with Millennium and Fortress? I'm sure there are all kinds of legal restrictions in the agreement.

I cannot believe this. This works out to $386.71 for every man, woman and child in the city. That means that if you have a family of 4 you may have to pay out over $1,500 for this building alone. And if you think this is the end it only the beginning. This is an absolute outrage.

The Globe's Gary Mason, who played a pivotal role in the City's recent election is asking some good questions about how we got here and what the extent of the damage is. He writes:

Fortress had originally agreed to lend the developer, Millennium Development Corp., $750-million to cover construction costs. It stopped advancing payments last September, allegedly over concerns about cost overruns. Those overruns, in the neighbourhood of about $125-million, were effectively covered by Millennium and the City of Vancouver when the city agreed in secret to advance $100-million to the developer to keep construction going.

So why is Fortress still balking at advancing any more money unless the city guarantees the entire amount of the $750-million loan? (The city has guaranteed about $190-million of the total. Fortress has advanced about $317-million so far.)

Is it possible that the real reason Fortress stopped advancing the money was because of its own financial problems, which burst into the open about the same time it cut off supplies to Millennium? Fortress's stock sank so low at one point last year that it briefly risked falling short of New York Stock Exchange listing standards. Fortress's shares lost 92 per cent of their value in 2008.

I'd also like to know the current value of the asset guarantees Millennium gave the city in order to get the $100-million loan to cover construction costs when Fortress suspended lending.

Those assets have been rumoured to be worth $200-million - at least they were at the time they were guaranteed. But what exactly are the assets? Other projects that were being built by Millennium? It's no secret that in the past several months the developer has halted construction on just about every project it had going in the province. Has that affected the value and/or status of the asset guarantees?

...the city is "on the hook" for the estimated $875-million in construction costs of the project plus the $193-million cost of the land for which it has not yet been paid. A potential $1-billion disaster...

from the article you source by Gary Mason who, back in 2007, according to Chris Shaw:

...claimed to be shocked, not by VANOC's perenial failure to keep promises or keep to the original budget, but because he could not find any decent scandal associated with VANOC or the Games...

Better late than never?