Vancouver's credit rating downgraded over Olympic Village bailout
Vancouver Mayor Gregor Robertson says Moody's Investors Service has downgraded the city's debt rating, and that could cost taxpayers more money as they finance the Olympic Athletes Village project.
The downgrading, to AAA– from AAA, could make it more expensive for the city to secure credit for the village bailout by as much as three-10ths of a percentage point, Robertson said.
The downgrading itself was linked to the additional financial risks associated with Vancouver's Olympic Village project, he said.
Earlier this month another credit rating agency, Standard & Poor's, placed Vancouver on a credit watch and hinted it may also downgrade its rating for the city as a result of potential debt coming from the village project.
Fortress Investment Group, a New York based hedge fund, was originally supposed to lend Millennium Development Corp. $750 million to build the condominum project that will house athletes during the 2010 Winter Olympic Games.
But it stopped payments to Millennium in September, after it had provided $317 million, because of the ongoing turmoil in global financial and real estate markets.
Since then, the city has covered construction costs with a $100-million bailout loan and has proposed to take over the project financing by borrowing money to lend directly to Millennium to complete the project.
Overruns have pushed the project's cost to $875 million. The development site is on city-owned land worth $200 million, putting the value of the whole development at more than $1 billion.