Vancouver eyes rental fix for Olympic Village
'Very difficult to recoup all of the investment for taxpayers'
The City of Vancouver is looking at renting out some of the roughly 450 unsold condos at the former Olympic Village, according to Coun. Raymond Louie.
"We're doing the analysis right now," Louie said Thursday. "I know we've done some preliminary analysis and in the end I think the numbers will speak for themselves and council will have to make a decision."
On Wednesday, the city negotiated an agreement with court-appointed receiver Ernst & Young to assume control of the $1-billion condo project after Millennium Developments was unable to make payments on the city's emergency loans.
The city provided about $1 billion in funding to bail out the project before the 2010 Winter Olympics. But after the Games, the developer was not able to sell the pricey units, causing the company to default on the loan. As of Sept. 30, the Millennium still owed $730 million on the outstanding loans.
This city was already planning to turn 252 units in the 1,108-unit development into a mix of low-income and market-rate rental units. The developer turned another 119 into rental units, and roughly 260 units were sold to the public.
Years to recoup cash
Meanwhile, Mayor Gregor Robertson has said it could be years before the City of Vancouver learns if it will recover the cash it has sunk into the former Olympic Village, now that the development has gone into receivership.
"It will be very difficult to recoup all of the investment for taxpayers on this, so at this point it will be really challenging to reach that break-even, but patience is what's critical," Robertson said after the agreement was announced Wednesday.
But Robertson said taking over the project was the best way for the city to recover its investment and reduce its risk.
"City taxpayers have been exposed to the full financial risk of the Olympic Village since June 2007, when the previous [Non Partisan Association] council agreed in secret to be the guarantor of the project," he said.
"Reaching a deal with Millenium is a win for everyone involved, and most of all taxpayers, because we avoid years of drawn-out legal battles, where everyone would lose," Robertson said in a statement released on Thursday morning. "This agreement helps mitigate the risk for taxpayers."
Terms not released
The terms of the deal remain under wraps, but Penny Ballem, the city manager, says ultimately the arrangement will be good for taxpayers because the city now effectively owns all the unsold condos and the retail space in the development on the shore of False Creek.
"The vast majority of the value is in the asset itself, in the unsold market condominiums," she said. "And as [condo marketer] Bob Rennie has always said, this is a two- to three-year process, and it's only at the end of that that we will have the final answer for the taxpayers."
As the receiver, Ernst & Young will now be in charge of a new marketing strategy. Millennium will remain the legal owner of the project but has given up all control over it. The company will transfer other assets to cover any shortfall around the debt, Ballem said.
"They have said [they] will be transferring assets to help make up the balance of that loan," she said.
Not everyone thinks the deal is good news for the city, and Coun. Suzanne Anton calls it a dark day for Vancouver taxpayers.
"The entire risk has been transferred to the taxpayer," she said. "Millennium is out of it, essentially. If the units don't sell at pretty much full value, the taxpayer will bear that loss."
Social housing empty
Following the 2010 Winter Games, units in the eight-block, 25-building village were to be turned into a combination of free-market condos and social housing.
But sales never really picked up. In September, Millennium came up short on its loan payment and then said it didn't expect to finish selling the more than 400 remaining units for another 2½ years.
Plans to turn 250 units into social housing were derailed, and nine months after the Olympics the allocated units remain empty.
The city says it plans to rent 125 of the units to municipal employees at market rates to improve cash flow from the project, while the remaining 125 social housing units will be managed by a housing co-op.