VANCOUVER - Nearly six years after categorizing the Olympic Village project as a “billion dollar boondoggle” as the city rode to the financial rescue of the troubled development, Mayor Gregor Robertson is now seeing the new Southeast False Creek neighbourhood differently.
What once the mayor suggested was a black hole from which taxpayers might possibly see the light of day is now a “gold medal finish” that came about as a result of astute financial stewardship by his Vision Vancouver council, with not a little help from a court-appointed receiver and the city’s top real estate marketer.
What caused the mayor to change his view Monday was the news that the city had just sold the remaining 67 condos in the former Olympic athletes village to Aquilini Group for $91 million. The money not only retires the outstanding portion of the $630 million the city borrowed commercially to finish the project, but also gives it another $70 million to put toward the cost of installing city services in the community.
The city is still out about $130 million in profit it expected to gain from the sale of the land to Millennium Developments, the original proponent of the project, city manager Penny Ballem told reporters. But she said that profit was only “aspirational” and that the city had fully recovered the $27 million it had spent to buy and assemble the land in the first place.
Robertson said in hindsight the city had “unrealistic hopes” for how much it would get from selling the land to Millennium, which he said had bid too much in the first place.
“The bid that was accepted was way higher than the other bids that came in so if you look at where the market went, it was unrealistic at that level and the city was never going to recover all that $200 million that was pledged,” the mayor said.
The sale to Aquilini, a Vancouver-based international behemoth that is into everything from the Vancouver Canucks to urban development to agriculture to First Nations developments to a proposed oil pipeline, ends the city’s involvement in the $1.1 billion Olympic Village project.
The city took over the development in February 2009 after Millennium Developments ran into financing trouble as a result of the 2008 world economic meltdown. The city, which had financially guaranteed the project in order to make sure it was completed in time for the 2010 Winter Olympics, put Millenium into voluntary receivership. It then took on $690 million in debt, including $60 million of its own cash. It was money some Vision Vancouver council members and others worried the city would never fully recover.
Robertson said efforts by receiver Ernst & Young and Bob Rennie of Rennie Marketing Systems helped to successfully end the city’s exposure.
“This is an extraordinary accomplishment on a project that many said would never make it into the black. It has been a long road. It has been a patient and methodical approach by the city to ensure we maximized for taxpayers to be whole on this project,” he said. “In this case, the Olympic Village is a true legacy for Vancouver. That dark cloud that has hung over it for some years has been blown away.”
David Negrin, the president of Aquilini Development and Construction, said in an email that the company bought the condo units as part of the company’s “long term investment horizon.” He said some of the units would be sold “while others will be retained for rent until sold.”
The announcement has already become useful election propaganda for Vision Vancouver, which immediately sent out press releases and communiques to donors crediting Robertson and his Vision council colleagues with rescuing the city from a financial mess it said was created by the former mayor, Sam Sullivan and his Non-Partisan Association council.
NPA Coun. George Affleck noted that it was a previous Coalition of Progressive Electors-Vision government before Sullivan’s government that had committed the city to the Olympic Games in the first place. And he said Robertson might be taking too much credit.
“This is a process that a receiver takes care of, not the mayor of the city. So the mayor should be careful taking credit for selling condos in the Olympic Village. He didn’t do that. We merely oversaw the process,” Affleck said.
The story behind the village’s financial problems is mired in numbers that would be hard for accountants to explain, let alone the average citizen to understand. Ballem struggled for nearly 45 minutes in a technical briefing to answer reporters questions about how much the city made or lost on the development. Much of that confusion hung around the missing $130 million in land profit the city expected to use against $200 million in servicing costs for roads, sewers, water lines, parks, shoreline restoration and other benefits to the community.
Ballem said the $70 million extra the city received at the end of the sale process will go toward defraying the $75 million it spent in servicing costs for the area on which the village sits. The rest of the money Millenium failed to pay would have been used for amenities and services on two adjacent parcels owned by the city that have yet to be developed.
However, the good news is that the city can pay off the debts attributed to the village and not be out of pocket, she said.
Developer Michael Geller, one of the harshest critics of the current council’s efforts, said he’s happy the city has paid off its loans, especially since Vision Vancouver councillors had mused that might never happen.
But he said the city still is on the hook for spending $110 million on social housing that was originally budgeted to cost $60 million.
“I think like every Vancouver taxpayer if the city has managed to reduce the losses below what many people expected, I am pleased,” Geller said. “But I think it is improper to suggest that taxpayers have not lost one cent in this project because that is just not true. We spent $50 million more than we should have on the social housing unit, which the city still owns because it could not find a non-profit group to take them over.”
Ballem said the city collected about $770 million in revenue from a variety of sources, including the most recent sale to Aquilini. The city managed to sell 32 properties it recovered from Millennium outside of the village. It sold them for about $68 million in profit after paying off expenses and mortgages. It also took control of $200 million in pre-sale revenues that Millennium had collected from people who committed to buying before the Olympics.
Over the last five years, Ernst & Young collected about $411 million from sales of commercial space and residential units, including the sale in December of the remaining commercial properties in the village’s main plaza for $45 million to First Capital Realty, a major mall owner.
The city has not yet released how much it cost to administer the recovery plan, including what Ernst & Young and Rennie Marketing Systems were paid. However, Ballem said those costs, as well as a $48 million writedown of the properties in 2010, are included in the figures the city released Monday.
Photograph by Jason Payne, PRV