Vancouver Olympic Village May Cost Taxpayers $875 Million
As reported by CBC News online:
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
But this sort of mismanaged construction nightmare can’t POSSIBLY happen in Chicago, right?
Vancouver City quickly set itself up as the project’s construction financier since it could easily handle a C$1 billion loan with its own credit facilities. (It has about $28 billion in credit room) It’s now set up debentures, borrowing the money from its banks at about 3.5%, and charging the developer about 9%. Once the Olympic Games are finished in March, the units will be converted from Games ready to sales ready, and the developer will complete the sale of the village, giving the city it’s investment back, plus a surplus. At the moment the only question is the size of the surplus. The City had designed the process to ensure it could retain control of the construction of the dozen high-rises should anything go wrong. It was American-created credit collapse crippled Fortress, the original construction financier. The media got pretty panicky because the new city council was blaming lots of things on the previous council for political reasons, but the City’s financial staff didn’t.