When Mayor Gregor Robertson was first elected six years ago, he warned Vancouver taxpayers were on the hook for $1-billion because of the city’s disastrous Olympic Village project.
The village – 1,100 condo units that had to be built for the 2010 Games – were behind schedule, in financial trouble, and heading for completion in the middle of a recession triggered by a collapse of the housing market.
On Monday, he declared that, thanks to his party’s careful strategy and a bulk sale of the final 67 condos to the Aquilini family for $91-million, all debt on the village had been wiped out.
And he said $70-million was left over to cover some of what the city spent on parks, seawalls, roads, a community centre, and other amenities.
“It’s a very good day for the City of Vancouver and particularly for city taxpayers. This is an extraordinary accomplishment on a project that many said would never make it into the black,” Mr. Robertson said.
He thanked B.C.’s best-known businessman, Jimmy Pattison, and high-powered lawyer Morley Koffman for their advice on the village, and then the media bombarded him and city manager Penny Ballem with questions that left many unsure of how the city’s accounting for the village really works.
The finances are complex, because the city committed to pay for the infrastructure in the area and for 252 units of social housing in the early years of the project. But then it got stuck with much more.
Private builder Millennium Development, which won the bid to develop the land with a $170-million offer, ran into trouble with its hedge-fund financing in late 2007 as it ran over budget amid the first signs of the recession.
The city made temporary loans to Millennium to keep construction going. Then, after Mr. Robertson was elected, the city took over the financing and management of the project. In November, 2010, Millennium agreed to put the project into receivership.
Ms. Ballem’s briefing on Monday, and the March report from the receivers who have been managing the village, elicited some key facts.
The city’s $690-million debt – essentially, the construction loan for the village – would be wiped out by the sale to the Aquilinis.
And, over the past five years, the city had received a total of $770-million, between individual condo sales, a bulk sale of the 119 condos that had been intended for rental, the sale of the retail spaces, and the $68-million the city obtained by taking over the 32 properties Millennium had put up as guarantees for city-financing loans.
What was not clear was how much the city spent on the village in total and whether city taxpayers will cover losses in other accounts.
Ms. Ballem said the city got only about $70-million of the promised $170-million for the land.
The receivership cost the city a lot.
According to the most recent report from receivers Ernst & Whinney, the city got a total of $493-million from sales of condos and retail spaces between November, 2010, and February, 2014. (It had received $200-million in pre-sales money before the receivership.)
But the city covered $81-million in costs to get there, among them: $21-million for marketing and sales commissions, $21-million to fix deficiencies , $8.8-million in fees to the receiver and legal team, and $8.3-million in holding costs, including $5.7-million that had to be paid in strata fees on empty condos.
The mayor and the project’s marketer, Bob Rennie, said the city benefited by investing in the asset to increase its value, rather than dumping it at fire-sale prices.