Vancouver councillors are gearing up to choose their own operators - and take on a $46-million loan guarantee - if necessary for their three empty Olympic village rental buildings in order to get people into them as soon as possible.
Those difficult decisions are being pondered at city hall this week in the wake of Housing Minister Rich Coleman saying that none of the three bids submitted Monday to his ministry from non-profit housing operators looked workable.
If the city proceeds solo, it would need to provide a guarantee for the $46-million that future operators will have to borrow for their prepaid leases.
That's one more straw added to the large financial burden it is carrying at the village, where the current council is determined to hang on to its 252 rental units and rent out half of them to low-income households at below-market rates.
BC Housing was not being asked to provide any subsidies, because the land and buildings are the city's legacy project from the 2010 Games. However, it was going to play a role in the overall transaction by providing a loan guarantee for the future operators, as well as helping out the city by running the bid process.
Mr. Coleman's public statement has pulled the rug out from the city's plans, leaving it with no operator and 252 units that remain empty after a six-month-long effort working with BC Housing to find one.
Now staff, the mayor and his Vision team are trying to figure out what their options are.
"Our staff is going to do an evaluation of those bids," said Councillor Geoff Meggs. "We should assess them because they were submitted in good faith. And our job is to deliver on our Olympic commitments and get those populated."
Mayor Gregor Robertson and Mr. Coleman had a meeting in Whistler Wednesday, where both are attending the Union of B.C. Municipalities convention, to talk about how to move forward after the startling collapse of the process.
Twenty-two non-profit groups that were potential operators viewed the rental buildings in August, but almost all decided not to put in a bid because, they said, there were too many uncertainties about the new green technologies in the buildings and the revenue forecasts.
City officials are baffled by that, because all of the province's new social-housing buildings are being built to the same kinds of green standards. As well, they felt they had allayed a lot of concerns during the bid process by offering to provide reserves in case there were unexpected expenses connected to the district heating system or any of the unfamiliar parts of the project.
Mr. Meggs said he didn't know what the impact would be of the city providing a $46-million loan guarantee on top of the other debt it is carrying on the Olympic village.
"No one's assessed that at this point," he said.
The city is currently carrying $1.6-billion in taxpayer-supported debt, triple the level it was carrying in 2006. That debt load, which works out to $2,623 per city resident, which is higher than in most Canadian cities, rose dramatically last February when the city took over the construction loan for the private developer building the 1,100-unit village.
But a spokesman at the Dominion Bond Rating Service, which assessed the city's finances in July, said that a loan guarantee for a project that has income being generated through rent is less problematic than debt or debt guarantees taken on for a project such as a bridge or building that generates no revenue.
As well, $46-million is a relatively modest amount.
"How we look at guaranteed debt is we look at the magnitude and would it add a meaningful amount of debt if [the city]were to fulfill that guarantee," said Travis Shaw, assistant vice-president of the public-finance division at DBRS in Toronto.
DBRS did assess Vancouver an AA rating in July, the same level that it was downgraded to last February after the city took over the construction loan for Millennium Development Corp. when its U.S. lender refused to advance any more money because of cost overruns on the project.
However, it did assess the city's outlook as stable this time, compared to negative in January, saying the city's heavy debt load is forecast to recede as profits from condo sales at the village are used to pay down the loan.