Seven hectares of the 32-hectare Southeast False Creek development site will be temporarily transformed into the Olympic Athletes Village during the 2010 Winter Games. (CBC)

An independent credit rating agency has placed Vancouver on a credit watch and may even downgrade the city's AA+ rating as a result of potential debt coming from the beleaguered Olympic Athletes Village project.

Standard & Poor's on Tuesday issued a bulletin about the city's finances, saying the impact on the city's debt could be significant if it borrows money to fund the remaining construction of the village.

"We believe that there's going to be an event in the next three months that will have a negative impact on the city's credit profile," Stephen Ogilvie, an analyst with the agency, told CBC News.

Vancouver city council passed a motion Monday to ask the provincial government to give it permission to borrow $458 million to complete the development project.

If that happens, Ogilvie said, Vancouver's credit rating could be downgraded, which in turn will make it more expensive for the city to borrow money in future.

The agency expects to resolve the credit watch when the full extent of the city's financial obligations to complete the project become clear, Ogilvie said.

Organizers open to saving money

The Vancouver Organizing Committee for the 2010 Winter Games said it is willing to listen to the city's ideas on how it can save money.

CEO John Furlong said he met last week with Mayor Gregor Robertson and city manager Penny Ballem to discuss the financial predicament facing the project.

"If we're certainly asked to sit down and collaborate and work with the city on anything, we will obviously do that. They're our partners," Furlong said Tuesday.

"Clearly, at the end of the day we have to have an Olympic Village and the city knows that and we're determined to get there and we believe we will get there."

The city has been covering the cost of construction on the village since October, when Fortress Investment Group, the funder of the Olympic Athletes Village project, stopped advancing funds to Millennium Development Corp., which is building the village.

The city has to come up with $458 million soon in order for construction of the Olympic Village to be completed, if ongoing negotiations with Fortress to reopen the loan fall through.

Olympic organizers are expected to take possession of the village's 1,100 units and other facilities this fall.

Of these housing units, 730 are to be sold to the public after the Games, 120 will be used as rentals, while 250 will be set aside for social and affordable housing.