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Olympic Village aerial view February 2010. (Anna Zalewski for The Globe and Mail/Anna Zalewski for The Globe and Mail)
Olympic Village aerial view February 2010. (Anna Zalewski for The Globe and Mail/Anna Zalewski for The Globe and Mail)

Gary Mason

Vancouver's Olympic Village: From blessing to burden Add to ...

The irony isn't lost on those around Gregor Robertson.

The Vancouver mayor rode into office on a wave of public anger over the city's involvement in the massive Olympic Village project. Yet he could very well be punished at the polls himself in a year's time if taxpayers decide once again to vent their anger over the issue.

The saga surrounding the City of Vancouver's involvement in the former Olympic athletes village, now a condominium project, has been an unmitigated disaster.

To be fair, Mr. Robertson inherited this mess and is doing his best to clean it up. On Thursday, he went public with where things stand and confirmed that the city will go after the assets of the developer - Millennium Development Corp. - if need be to protect taxpayer dollars.

What Mr. Robertson didn't say, because he can't, is that he is sitting on a property appraisal of the Olympic Village that is grotesquely ugly. Here is the picture: Millennium owes the city $731-million, which includes $170-million for the land on which the project was built. Currently, according to the appraisal the city commissioned, the project isn't worth anything near that.

And you thought underwater mortgages were just phenomena in hard-hit areas of the United States.

Not surprisingly, no one around City Hall wants to talk about underwater mortgages. But I'm reliably informed that the gap between what Millennium owes and what the property is worth today is somewhere between $150-million and $200-million.

Meantime, the politicking going on behind the scenes is fascinating.

One group is urging the mayor to dump the remaining 480 unsold condos at fire-sale prices. You would describe this lot as the "cut-your-losses" camp. But then you have other developers in town telling the mayor he can't slash prices because it would have a ripple effect throughout the city. It wouldn't just cost city taxpayers tens of millions of dollars, but innocent third parties, too. You might describe this group as the "if-you-nail-us-we'll-nail-you-come-election-time" gang.

One interesting development involves Premier Gordon Campbell.

This week, he gave an audience to Bob Rennie, the condo marketer who stirs the drinks in Vancouver. Mr. Rennie, who has the unenviable task of selling the Olympic village condos, has his hands in everything to do with housing in B.C., and his is an opinion that matters - as much as some people hate to admit it.

Mr. Rennie has asked Mr. Campbell to consider giving the Olympic village an HST exemption. In case you've just returned from Pluto, the B.C. government introduced the harmonized sales tax on July 1, and it has added 7 per cent to the final cost of new homes over $525,000. Sales have been affected, naturally. (Before the provincial sales tax and federal goods and services tax were harmonized, new home sales were subject to the GST only, not the 7-per-cent sales tax.) The picture has become clouded, however, since the government announced it would hold a referendum on the future of the HST in a year's time.

This has thousands of people holding off buying real estate until they find out if they will have to pay the extra 7 per cent.

Mr. Rennie did not get far trying to persuade Mr. Campbell to bail out the village by making the unsold units HST exempt. He did, however, make some headway in a discussion about delaying the HST that would be triggered on the 100 units that are going to be rented out. On 100 units, that HST amounts to almost $9-million.

Mr. Rennie asked for the same "temporary occupancy" grounds that allowed the developer to avoid paying GST because Olympians stayed in the village during the 2010 Games. The idea with the HST is the developer would pay it later when the entire project is on a more sustainable financial footing.

So this will likely happen.

The city continues to take its counsel concerning the project from the team of outside experts it assembled. One of the first people Mr. Robertson consulted on this fiasco after taking office was Jimmy Pattison. You could do worse.

The city's experts are urging the mayor to stay cool, don't panic, hang on to the property and wait for the market to return, even if it takes three to four years. Meantime, the city will continue to look at going after Millennium's other assets to recoup any losses it might suffer. But that is a particularly unattractive alternative that would likely be mired in the courts for years.

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Follow on Twitter: @garymasonglobe

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