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City forgoes billion-dollar Millennium mortgage

Vision, COPE and the NPA voted unanimously for the $100 million bailout

City manager Penny Ballem discharged the beleaguered developer of the Olympic Village and a controversial West End tower from a mortgage once worth $1 billion, according to documents filed last February with the Land Title Office.

Millennium Properties and its Madison, Robson and English Bay divisions were listed on a mortgage application signed Sept. 14, 2010 by president Shahram Malekyazdi. The principal amount was $1 billion with a 20 per cent annual interest rate and the city was listed as the lender.

The 45-page document included Millennium's acknowledgement in a Joint and Several Demand Debenture that it was liable for $1 billion for all properties it listed. The debenture was dated Oct. 14, 2008, the same day Vision Vancouver and COPE councillors joined the NPA majority to vote unanimously behind closed doors for a $100 million bailout of Millennium. Lender Fortress Credit Corporation walked away amid the global credit crunch. City council already guaranteed in 2007 to complete the $1.1 billion Olympic Village.

Ballem signed the onepage mortgage discharge on Feb. 2, 2011. The only four parcels identified on the form were registered to the Millennium division that is now developing the 21-storey Alexandra English Bay project at Davie and Bidwell streets with Concord Pacific.

Alexandra is to contain 49 market rental suites averaging 435 square feet. The city agreed to forego more than $1 million in development cost levies and taxes under its Short Term Incentives for Rental housing scheme.

Last April, Ballem announced the city took over 32 of Millennium's Vancouver, Burnaby, North Shore and Toronto properties worth a net $45.48 million. Buildings include a North Vancouver Starbucks, a West Vancouver Shopper's Drug Mart and the old Province newspaper building near Victory Square in Vancouver. The city also had a $5 million third mortgage on the Alexandra site.

Ballem did not respond to repeated interview requests. "The city is working on various legal and financial issues related to bringing the assets into the city portfolio and preparing a plan around future disposal," city hall spokeswoman Wendy Stewart said by email. "We will be reporting this work and plan for disposal to council in the near future. Once council has provided direction, the decisions will be made public."

The April report estimated the city would recover $56 million to $70 million, but Ballem conceded the city would lose a forecasted $48 million on the Olympic Village, now marketed as the Village on False Creek. Ballem denied the loss was as much as $200 million.

Millennium Southeast False Creek Properties fell $8 million short of the $200 million it was due to pay on Aug. 31, 2010. Millennium had racked up $740 million in debts on the project and lost control when it was replaced by court-appointed receiver Ernst and Young on Nov. 17, 2010.

West End Neighbours president Randy Helten said too many questions remain about the city's relationship with luxury condo developer Millennium and the STIR program.

"Since day one the community and our group have been concerned about the problems with trust in city hall and these decisions relating to the STIR program," Helten told the Courier. "Many decisions of the last few years have given us much concern about whether city council is really serving the public interest."

Millennium's Malekyazdi did not respond for comment before the Courier's Thursday deadline.