Vancouver taxpayers could be on the hook for as much as $875 million to complete the Olympic Athletes Village unless city council can reopen a loan given to the developer or find new financing.
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.
"We cannot turn back the clock of the actions of the last mayor and council. We are financially and legally committed to completing the project," Robertson told reporters Friday afternoon during a special briefing on the financial arrangements of the project.
'The Olympic village is a billion-dollar project, and the city taxpayers are on the hook for all of it.'— Vancouver Mayor Gregor Robertson
"Fortress, acting within their rights under that deal, stopped advancing funds to the developer for the Olympic Village construction …," he said.
A $100-million bailout loan was approved on Oct. 14 by council during an in-camera meeting, and $79 million has been used so far. The balance will run out later this month.
The financial details released Friday ended months of speculation about the village finances, which began when the bailout made headlines during the civic elections in November.
The initial budget for building the Olympic Village was $750 million, but there has been an estimated cost overruns of $125 million due to increasing construction costs and the global economic downturn.
That means the city is now liable for $875 million if negotiations with Fortress to reopen the loan fail, Robertson said.
That's on top of $200 million Millennium was to pay the city for land of the Southeast False Creek development site.
"The Olympic village is a billion-dollar project, and the city taxpayers are on the hook for all of it," Robertson said.
Construction of the project will be halted in mid-February if the city cannot come up any new money.
"Council has directed city staff to negotiate a financial arrangement that will best protect the taxpayers of Vancouver. And these negotiations are ongoing," Robertson said.
"We know we've been dealt a very tough hand, but I believe we can meet our obligations."
Asked what would happen if negotiations with Fortress fall through, Robertson said there could still be other sources of financing available.
"It is a difficult time to be accessing that but the city is in good strong financial condition. We, ultimately, have other means to do that but we have a negotiation with Fortress first and foremost to carry forward," Robertson said.
Council will inform taxpayers every decision it makes in the months ahead regarding the financing of the Olympic Village construction, he said.